RETIREMENT LAWS AND BENEFITS (3)

RETIREMENT LAWS AND BENEFITS (3)

November 19, 2022 @ 11:18 AM 2 weeks ago


MININUM RETIREMENT BENEFITS

THE New Retirement Pay Law intends to give the minimum retirement benefits to employees not otherwise entitled thereto under the collective bargaining and other agreements.

A retirement plan, as a labor contract, is not merely contractual in nature but impressed with public interest.
If the retirement provisions of the company run contrary to law, public morals, or public policy, such provisions may be reviewed and even voided.

A retirement clause that entitles the retiring employee to benefits less than what is guaranteed under the law cannot be sustained. (Santo vs. University of Cebu, August 28, 2019)

According to the Supreme Court, while the employer is free to grant retirement benefits and impose different age or service requirements, the benefits should not be lesser than those provided in Article 302 of the Labor Code. (Santo vs. University of Cebu, August 28, 2019)

SEPARATE AND DISTINCT BENEFITS

It bears emphasis that the grant of insurance proceeds does not necessarily bar the grant of retirement benefits.
These are two (2) separate and distinct benefits that an employer may provide to its employees.

A contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.

On the other hand, retirement plans, while initially humanitarian in nature, now concomitantly serve to secure loyalty and efficiency on the part of employees, and to increase continuity of service and decrease the labor turnover, by giving to the employees some assurance ofsecurity as they approach and reach the age at which earning ability and earnings are materially impaired or at an end. (UDMC vs. Bernadas, December 13, 2017)

In addition, the retirement pay payable under Article 302 of the Labor Code is apart from the retirement benefit claimable by the qualified employee under the social security law. Section 2 of RA 7641 clearly states that “Nothing in this Act shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices.”