Dear Attorney,

I have a question regarding my mother’s retirement from her job at a restaurant where she has been employed since 2008. She is now 63 years old and retired on August 29 of this year. The restaurant had more than 10 employees in the past, but since the pandemic in 2020, the number of employees has fallen below 10. The owner claims they are not obligated to provide retirement pay because of this. Could you clarify whether my mother is entitled to retirement pay despite the current number of employees? Thank you.

Insights

In the Philippines, the entitlement to retirement pay is governed by Article 302 of the Labor Code, which mandates that private sector employees who have served at least five years and are at least 60 years old (but not over 65) are entitled to retirement benefits.

A critical factor in this situation is the employee count. The Labor Code exempts businesses that regularly employ fewer than 10 workers from the requirement to pay retirement benefits. However, in cases where the workforce was above the 10-employee threshold before the reduction in numbers, such as during the pandemic, it is crucial to evaluate the entire employment period. The law considers the regular number of employees during the majority of the employment term, not just a temporary reduction due to circumstances like the pandemic.

If the company consistently employed more than 10 workers before 2020, the employer is still likely obligated to provide retirement pay, despite the reduction during the pandemic. Employers cannot evade the retirement benefit obligation by temporarily reducing their workforce.

Legal consultation is recommended for further analysis, including a review of employment contracts and workforce data over the years, to determine compliance with the Labor Code’s retirement provisions.