Forcing employees to retire before 65 illegal

The compulsory retirement age in private companies is 65. The optional retirement age is 60, provided the employee has served the company for at least five years. The option to retire belongs to the employee not to the employer. Compelling employees to retire before age 65 is illegal. The employee illegally dismissed should be reinstated with full backwages. These are the mandates of Article 302 of the Labor Code, as amended by Republic Act 8558.

The Supreme Court, en banc (meaning all the 15 justices composing it) ruled in favor of the employee and against management in the case of Alfredo Laya Jr. vs. Philippine Veterans Bank. The court did not uphold the bank's early retirement plan, lowering the retirement age because the employee did not agree to it. Retirement is a bilateral process. Both the employer and the employee must enter into such an agreement. Here in this case, the bank imposed the plan unilaterally and the employee's signature in the employment contract did not constitute as concurrence to the lowering of the age of retirement.

The Supreme Court declared through the written opinion of Justice Lucas Bersamin, later chief justice and now executive secretary, that “An employee in the private sector who did not agree to the terms of an early retirement plan cannot be separated from the service before he reaches the age of 65 years. The employer who retires the employee prematurely is guilty of illegal dismissal, and he is liable to pay backwages and to reinstate him without loss of seniority and other benefits, unless the employee has, in the meanwhile, reached the retirement age under the labor Code, in which case, he is entitled to separation pay, pursuant to the terms of the plan, with legal interest on the backwages and separation pay reckoned from the finality of the decision.”

The principle is very clear: Every regular employee has the right to security of tenure. That is, he has the right to stay in employment until age 65, which the law considers the mandatory retirement age. Of course, he may be dismissed before that age if there is just cause when, for instance, he committed serious misconduct, insubordination, fraud or breach of trust, gross and habitual negligence, crimes against the person of the employer, or any analogous case. He may also be separated before age 65 if there are enough basis by the company to undertake retrenchment, redundancy, installation of labor-saving devices or company closure, which are authorized causes, under Article 298.

The case of Philippine Veterans Bank was decided against management because Mr. Laya's right to security of tenure had been violated. His signature on the employment contract did not result in agreement to the lowering of retirement age. That decision then is a big blow against all banks and all companies which had early retirement plans without the open, explicit, and specific concurrence by each of the employees. The unions, if any, cannot waive the individual rights of the union members to such security of tenure. It can be waived only by each and every employee, if ever such is their true and genuine will and decision.

This decision by the full Supreme Court is a huge victory for the employees in this country. The highest court of the land can always be relied upon to uphold the constitutionally-mandated full protection to labor, local or overseas, organized or unorganized. Even if the executive and the legislative departments sometimes have other perspectives, the judiciary led by the Supreme Court remains as the impregnable bastion of workers' protection in our land.