Legal Questions

Who should exercise the option to retire?

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Compulsory retirement takes place at age 65, while optional retirement is primarily determined by the CBA or other employment contract or employer’s retirement plan.  In the absence of any provision on optional retirement in a CBA, other employment contract, or employer’s retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five (5) years in the establishment concerned.  That prerogative is exclusively lodged in the employee.

Thus, in Capili vs. NLRC, [G. R. No. 120802, June 17, 1997, 273 SCRA 576], it was held that the act of accepting the retirement benefits is deemed an exercise of the option to retire under the third paragraph of Article 287, as amended by Republic Act No. 7641. Thereunder, he could choose to retire upon reaching the age of 60 years, provided it is before reaching 65 years which is the compulsory age of retirement. (Capili vs. NLRC, G. R. No. 120802, June 17, 1997, 273 SCRA 576).

(Lifted from “2009 PRE-WEEK BAR EXAM NOTES ON LABOR LAW”, Atty. Chan, 2009)

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