Forced Early Retirement

Can management, pursuant to a stipulation in a Collective Bargaining Agreement (CBA), retire an employee who has not yet reached the minimum compulsory retirement age under the Labor Code?


Retirement, as a specie of termination of employment, is different from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. Retirement, governed by Article 287 of the Labor Code, is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former.

By their acceptance of the CBA, the union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management. Yet, retirement provisions agreed upon in the CBA are not absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided (for instance, a provision which allows the management to unilaterally “retire” employees after one month of service, or entitles the retiring employee to benefits less than what is guaranteed under the Labor Code.

On the other hand, a CBA may validly accord management the prerogative to optionally retire an employee under the terms and conditions mutually agreed upon by management and the bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age.

In the recent case of Cainta Catholic School vs. Cainta Catholic School Employees Union (G.R. No. 151021, 4 May 2006), the CBA between the school and the union provides that the school has the option to retire an employee upon reaching the age limit of 60 or after having rendered at least 20 years of service. In other words, the CBA provision validly allows the employee to be retired even before reaching the age of 60, provided that he/she had rendered 20 years of service. Twenty years is a more than ideal length of service an employee can render to one employer.

3 thoughts on “Forced Early Retirement

  1. seanjames

    There are laws, so i think following the rules would be better. though i found this Philippine Retirement Website and i hope this could help… well i found it useful. there are lot of ways to be productive while being just comfortable and all…

  2. Charles

    Living cheaper real estate investment in Philippines a retirement perspective of property income, taxes and Philippine investment prospects.

  3. Grace A.

    Hi, our company is very young just about 3 years in operation and when they started, they hired one who is 57 years old. So this June she is turning 60 and based on our handbook, when one reaches 60, he must send a written request to the employer for an extension of another year, this can be done yearly until such time when one or both of them have decided not to continue. my question is, should the employer decide or opt not to grant an extension and considering that she has rendered only 3 years in service, would there be any violation on the part of the employer? here is a what is stated in our handbook;

    An employee upon reaching the age of sixty (60) years and who has served at least five (5) years in the company, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

    Late retirement requires yearly consent from the employer; however, this does not extend beyond age 65.
    would the company be violating any law if we will not allow her to continue after she celebrates her 60th this June?


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