Coverage:

SECTION 1. Coverage This rule shall apply to all establishment and undertakings,
whether operated for profit or not, including educational, medical, charitable, and
religious institutions and organizations, in cases of regular employment with the
exception of the Government and its political subdivision including governmentowned or controlled corporations.
Art. 284. Coverage. The provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not.
Security of Tenure:
Art. 283. Miscellaneous provisions. x x x (b) Subject to the constitutional right of
workers to security of tenure and their right to be protected against dismissal
except for a just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a statement of
the causes for termination and shall afford the latter ample opportunity to be heard
and to defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to guidelines
set by the Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity
or legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer. The Secretary of the
Department of Labor and Employment may suspend the effects of the termination
pending resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before whom such
dispute is pending that the termination may cause a serious labor dispute or is in
implementation of a mass lay-off. (As amended by Section 33, Republic Act No.
6715, March 21, 1989)
Art. 285. Security of tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. (As amended by Section 34, Republic Act No.
6715, March 21, 1989)
Art. 291. Termination by employee.
(a) An employee may terminate without just cause the employee-employer
relationship by serving a written notice on the employer at least one (1) month in
advance. The employer upon whom no such notice was served may hold the
employee liable for damages.

(b) An employee may put an end to the relationship without serving any notice on
the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor and person of
the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or
his representative;
3. Commission of a crime or offense by the employer or his representative against
the person of the employee or any of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
Section 18. (2) No involuntary servitude in any form shall exist except as a
punishment for a crime whereof the party shall have been duly convicted.
Art. 292. When employment not deemed terminated. The bona-fide suspension of
the operation of a business or undertaking for a period not exceeding six (6)
months, or the fulfillment by the employee of a military or civic duty shall not
terminate employment. In all such cases, the employer shall reinstate the employee
to his former position without loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the resumption of operations of
his employer or from his relief from the military or civic duty.
SECTION 12. Suspension of relationship. The employer-employee relationship
shall be deemed suspended in case of suspension of operation of the business or
undertaking of the employer for a period not exceeding six (6) months, unless the
suspension is for the purpose of defeating the rights of the employees under the
Code, and in case of mandatory fulfillment by the employee of a military or civic
duty. The payment of wages of the employee as well as the grant of other benefits
and privileges while he is on a military or civic duty shall be subject to special laws
and decrees and to the applicable individual or collective bargaining agreement and
voluntary employer practice or policy.
Art. 288. Termination by employer. An employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.

Art. 289. Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the installation of
laborsaving devices or redundancy, the worker affected thereby shall be entitled to
a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year.
Art. 290. Disease as ground for termination. An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for
every year of service, whichever is greater, a fraction of at least six (6) months
being considered as one (1) whole year.
SECTION 1. Coverage This rule shall apply to all establishment and undertakings,
whether operated for profit or not, including educational, medical, charitable, and
religious institutions and organizations, in cases of regular employment with the
exception of the Government and its political subdivision including governmentowned or controlled corporations.
SECTION 2 Security of Tenure.
(a) In all cases of regular employment, the employer shall not terminate the
services of an employee except for just and authorized causes as provided by law,
and subject to the requirements of due process. The foregoing shall also apply in
cases of probationary employment; Provided, however, That in such cases,
termination of employment due to failure of employee to qualify in accordance with
the standards of the employer made known to the former at the time of
engagement may also be a ground for termination of employment. In cases of
employment covered by contracting or subcontracting arrangement, no employee
shall be dismissed prior to the expiration of the contract between the principal and
contractor or subcontractor as defined in Rule VIII-A, Book III of these Rules, unless
the dismissal is for just or authorized cause, or is brought about by the completion
of the phase of the contract for which the employee was engaged, but in any case,
subject to the requirements of due process or prior notice. In all cases of
termination of employment, the following standards of due process shall be
substantially observed: For termination of employment based on just causes defined
in Article 288 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to
explain his side.
(ii) A hearing or conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination. For termination of employment as defined in Article 289 of the Labor
Code, the requirement of due process shall be deemed complied with upon service
of a written notice to the employee and the appropriate Regional Office of the
Department of Labor and Employment at least thirty days before the effectivity of
the termination, specifying the ground or grounds for termination. If the termination
is brought about by the completion of a contract or phase thereof, or by failure of an
employee to meet the standards of the employer in the case of probationary
employment, it shall be sufficient that a written notice is served the employee
within a reasonable time from the effective date of termination.
SECTION 3. Reinstatement. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority and to backwages.
Section 14. No decision shall be rendered by any court without expressing therein
clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall
be refused due course or denied without stating the legal basis therefor.
Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may
be entertained only on any of the following grounds:
a. If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;
b. If the decision, order or award was secured through fraud or coercion, including
graft and corruption;
c. If made purely on questions of law; and
d. If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.
In case of a judgment involving a monetary award, an appeal by the employer may
be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from.
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be

executory, even pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for reinstatement
provided herein.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter
shall impose reasonable penalty, including fines or censures, upon the erring
parties.
In all cases, the appellant shall furnish a copy of the memorandum of appeal to the
other party who shall file an answer not later than ten (10) calendar days from
receipt thereof.
The Commission shall decide all cases within twenty (20) calendar days from receipt
of the answer of the appellee. The decision of the Commission shall be final and
executory after ten (10) calendar days from receipt thereof by the parties.
Any law enforcement agency may be deputized by the Secretary of Labor and
Employment or the Commission in the enforcement of decisions, awards or orders.
(As amended by Section 12, Republic Act No. 6715, March 21, 1989)
Art. 290. Offenses. Offenses penalized under this Code and the rules and
regulations issued pursuant thereto shall prescribe in three (3) years.
All unfair labor practice arising from Book V shall be filed with the appropriate
agency within one (1) year from accrual of such unfair labor practice; otherwise,
they shall be forever barred.
Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;
However, when the action arises from or out of any act, activity, or conduct of any
public officer involving the exercise of powers or authority arising from Martial Law
including the arrest, detention and/or trial of the plaintiff, the same must be brought
within one (1) year.
5.2 Components of One-half () Month Salary. For the purpose of determining the
minimum retirement pay due an employee under this Rule, the term one-half
month salary shall include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used
herein, the term salary includes all remunerations paid by an employer to his
employees for services rendered during normal working days and hours, whether
such payments are fixed or ascertained on a time, task, piece of commission basis,
or other method of calculating the same, and includes the fair and reasonable
value, as determined by the Secretary of Labor and Employment, of food, lodging or
other facilities customarily furnished by the employer to his employees. The term
does not include cost of living allowances, profit-sharing payments and other

monetary benefits which are not considered as part of or integrated into the regular
salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave; (
c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should
be included in the computation of the employees retirement pay.
SECTION 6. Exemption from tax. The retirement pay provided in the Act may be
exempted from tax if the requirements set by the Bureau of Internal Revenue under
Sec. 2 (b) item (1) of Revenue Regulations No. 12-86 dated August 1, 1986 are met,
to wit:
Pensions, retirement and separation pay. Pensions, retirement and separation pay
constitute compensation subject to withholding, except the following:
(1) Retirement benefits received by officials and employees of private firms under a
reasonable private benefit plan maintained by the employer, if the following
requirements are met:
(i) The benefit plan must be approved by the Bureau of Internal Revenue;
(ii) The retiring official or employee must have been in the service of the same
employer for at least ten (10) years and is not less than fifty (50) years of age at the
time of retirement; and
(iii) The retiring official or employee shall not have previously availed of the
privilege under the retirement benefit plan of the same or another employer.
Title II: RETIREMENT FROM THE SERVICE
Art. 293. Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employees
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said
establishment, 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.

Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves.
Retail, service and agricultural establishments or operations employing not more
than ten (10) employees or workers are exempted from the coverage of this
provision.
Violation of this provision is hereby declared unlawful and subject to the penal
provisions under Article [294] of this Code. (As amended by RA 8558).
RULES IMPLEMENTING THE NEW RETIREMENT LAW (April 1, 1993)
Pursuant to the provisions of Article 287 of the Labor Code as amended by Republic
Act No. 7641, in relation to Article 5 of the same Code, RULE II of Book VI of the
Rules Implementing the Labor Code is hereby issued, the full text of which shall
read as follows:
RULE II
Retirement Benefits
SECTION 1. General Statement on Coverage. This Rule shall apply to all
employees in the private sector, regardless of their position, designation or status
and irrespective of the method by which their wages are paid, except to those
specifically exempted under Section 2 hereof. As used herein, the term Act shall
refer to Republic Act No. 7641 which took effect on January 7, 1993.
SECTION 2. Exemptions. This Rule shall not apply to the following employees:
2.1 Employees of the National Government and its political subdivisions, including
Government-owned and/or controlled corporations, if they are covered by the Civil
Service Law and its regulations.
2.2 Domestic helpers and persons in the personal service of another. (Deleted by
Department Order No. 20 issued by Secretary Ma. Nieves R. Confessor on May 31,
1994.)
2.3 Employees of retail, service and agricultural establishment or operations
regularly employing not more than ten (10) employees. As used in this sub-section;
(a) Retail establishment is one principally engaged in the sale of goods to endusers for personal or household use. It shall lose its retail character qualified for
exemption if it is engaged in both retail and wholesale sale of goods.
(b) Service establishment is one principally engaged in the sale of service to
individuals for their own or household use and is generally recognized as such.
(c) Agricultural establishment/operations refers to an employer which is engaged
in agriculture. This terms refers to all farming activities in all its branches and
includes among others, the cultivation and tillage of the soil, production, cultivation,
growing and harvesting of any agricultural or horticultural commodities, dairying,

raising of livestock or poultry, the culture of fish and other aquatic products in farms
or ponds, and any activities performed by a farmer or on a farm as incident to or in
conjunction with such farming operations, but does not include the manufacture
and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other
farm products.
SECTION 3. Retirement under CBA/contract.
3.1 Any employee may retire or be retired by his employer upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract or retirement plan subject to the provisions of
Section 5 hereof on the payment of retirement benefits.
3.2 In case of retirement under this Section, the employee shall be entitled to
receive such retirement benefits as he may have earned under existing laws and
any collective bargaining agreement and other agreements; provided, however, that
an employees retirement benefits under any collective bargaining and other
agreements shall not be less than those provided under this Rule, and provided
further that if such benefits are less, the employer shall pay the difference between
the amount due the employee under this Rule and that provided under the
collective or individual agreement or retirement plan.
3.3 Where both the employer and the employee contribute to a retirement fund in
accordance with an individual or collective agreement or other applicable
employment contract, the employers total contribution thereto shall not be less
than the total retirement benefits to which the employee would have been entitled
had there been no such retirement fund. In case the employers contribution is less
than the retirement benefits provided under this Rule, the employer shall pay the
deficiency.
SECTION 4. Optional; Compulsory Retirement.
4.1 Optional Retirement. In the absence of a retirement plan or other applicable
agreement providing for retirement benefits of employees in an establishment, an
employee may retire upon reaching the age of sixty (60) years or more if he has
served for at least five (5) years in said establishment.
4.2 Compulsory Retirement. Where there is no such plan or agreement referred to
in the immediately preceding sub-section, an employee shall be retired upon
reaching the age of sixty-five (65) years.
4.3 Upon retirement of an employee, whether optional or compulsory, his services
may be continued or extended on a case to case basis upon agreement of the
employer and employee.
4.4 Service Requirement. The minimum length of service in an establishment or
with an employer of at least five (5) years required for entitlement to retirement pay
shall include authorized absences and vacations, regular holidays and mandatory
fulfillment of a military or civic duty.
SECTION 5. Retirement Benefits.

5.1 In the absence of an applicable agreement or retirement plan, an employee who

retires pursuant to the Act shall be entitled to retirement pay equivalent to at least
one-half () month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
5.2 Components of One-half () Month Salary. For the purpose of determining the
minimum retirement pay due an employee under this Rule, the term one-half
month salary shall include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used
herein, the term salary includes all remunerations paid by an employer to his
employees for services rendered during normal working days and hours, whether
such payments are fixed or ascertained on a time, task, piece of commission basis,
or other method of calculating the same, and includes the fair and reasonable
value, as determined by the Secretary of Labor and Employment, of food, lodging or
other facilities customarily furnished by the employer to his employees. The term
does not include cost of living allowances, profit-sharing payments and other
monetary benefits which are not considered as part of or integrated into the regular
salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should
be included in the computation of the employees retirement pay.
5.3 One-half month salary of employees who are paid by results. For covered
workers who are paid by results and do not have a fixed monthly rate, the basis for
determination of the salary for fifteen days shall be their average daily salary (ADS),
subject to the provisions of Rule VII-A, Book III of the Rules Implementing the Labor
Code on the payment of wages of workers who are paid by results. The ADS is the
average salary for the last twelve (12) months reckoned from the date of their
retirement, divided by the number of actual working days in that particular period.
SECTION 7. Penal Provision. It shall be unlawful for any person or entity to
circumvent or render ineffective the provisions of the Act. Violations thereof shall be
subject to the penal provisions provided under Article 288 of the Labor Code of the
Philippines.
SECTION 8. Relation to agreements and regulations. Nothing in this Rule shall
justify an employer from withdrawing or reducing any benefits, supplements or
payments as provided in existing laws, individual or collective agreements or
employment practices or policies. All rules and regulations, policy issuances or
orders contrary to or inconsistent with these rules are hereby repealed or modified
accordingly.
SECTION 9. Effectivity. This Rule took effect on January 7, 1993 when the Act went
into force.

RA 8558 : AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. 442, AS

AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES BY
REDUCING THE RETIREMENT AGE OF UNDERGROUND MINE WORKERS FROM SIXTY
(60) TO FIFTY (50)
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled::
Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known
as the Labor Code of the Philippines, is hereby amended to read as follows:
"ART. 287. Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract.
"In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employee's
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided herein.
"In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said
establishment, 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.
"Unless the parties provide for broader inclusions, the term onehalf (1/2) month
salary shall mean fifteen (15) days plus onetwelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves.
"An underground mining employee upon reaching the age of fifty (50) years or
more, but not beyond sixty (60) years which is hereby declared the compulsory
retirement age for underground mine workers, who has served at least five (5) years
as underground mine worker, may retire and shall be entitled to all the retirement
benefits provided for in this Article.
"Retail, service and agricultural establishments or operations employing not more
than ten (10) employees or workers are exempted from the coverage of this
provision.
"Violation of this provision is hereby declared unlawful and subject to the penal
provisions provided under Article 288 of this Code.
"Nothing in this Article shall deprive any employee of benefits to which he may be
entitled under existing laws or company policies or practices."

Section 2. This Act shall take effect fifteen (15) days after its complete publication in
the Official Gazette or in at least two (2) national papers of general circulation,
whichever comes earlier. Approved: February 26, 1998
Guidelines for the Effective Implementation of RA 7641, The Retirement Pay Law A.
COVERAGE
RA 7641 or the Retirement Pay Law shall apply to all employees in the private
sector, regardless of their position, designation or status and irrespective of the
method by which their wages are paid. They shall include part-time employees,
employees of service and other job contractors and domestic helpers or persons in
the personal service of another. The law does not cover employees of retail, service
and agricultural establishments or operations employing not more than ten (10)
employees or workers and employees of the National Government and its political
subdivisions, including Government-owned and/or controlled corporations, if they
are covered by the Civil Service law and its regulations.
B. COMPUTATION OF RETIREMENT PAY
A covered employee who retires pursuant to RA 7641 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. The law is
explicit that one-half month salary shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash equivalent of not more than five (5) days
service incentive leaves unless the parties provides for broader inclusions.
Evidently, the law expanded the concept of one-half month salary form the usual
onemonth salary divided by two. In reckoning the length of service, the period of
employment with the same employer before the effective date of the law on January
7, 1993 shall be included.
C. SUBSTITUTE RETIREMENT PLAN
Qualified workers shall be entitled to the retirement benefit under RA 7641 in the
absence of any individual or collective agreement, company policy or practice. In
case there is such an agreement, policy or practice providing retirement benefit
which is equal or superior to that which is provided in the Act, said agreement,
policy or practice will prevail.
As provided in RA 7742, a private employer shall have the option to treat the
coverage of the PAG-IBIG Fund as a substitute retirement benefit for the employee
concerned within the purview of the Labor Code as amended; provided, such option
does not in any way contravene an existing collective bargaining agreement or
other employment agreement. Thus, the PAG_IBIG Fund can be considered as a
substitute retirement plan of the company for its employees provided that such
scheme offers benefits which are more than or at least equal to the benefits under
RA 7641. If said scheme provides less than what the employee is entitled to under
RA 7641, the employer is liable to pay the difference.

If both the employee and the employer contribute to a retirement plan, only the
employers contribution and its increments shall be considered for full or partial
compliance with the benefit under RA 7641. On the other hand, where the employee
is the loan contributor to the PAG-IBIG Fund, the employer being exempted from its
coverage, the employer is under obligation to give his employee retirement benefits
under the ACT. Done in the City of Manila, this 24th day of October 1996.