Am I entitled to retirement pay, and how is it computed?
Last updated: 2026-07-12 · Educational content; not legal advice.
Short answer
Yes, if there is no better retirement plan in your company or CBA, RA 7641 (amending Article 302, formerly 287, of the Labor Code) gives a minimum retirement pay to an employee who is at least 60 years old (optional) or 65 (compulsory) and who has served the employer at least five (5) years. The minimum is one-half (1/2) month salary for every year of service, and "one-half month salary" is defined as 22.5 days — that is 15 days pay, plus one-twelfth of the 13th-month pay (about 2.5 days), plus the cash value of 5 days of service incentive leave. A fraction of at least six months of service counts as one whole year.
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Frequently asked
How do I compute my retirement pay?
A common formula is: latest daily rate x 22.5 days x years of service. The 22.5-day factor is the statutory value of "one-half month salary" under RA 7641 (15 days + 2.5 days for the 13th-month component + 5 days SIL). A company retirement plan that gives more prevails; RA 7641 is only the floor.
Is retirement pay the same as separation pay?
No. Separation pay is for authorized-cause termination (like redundancy or closure), while retirement pay under RA 7641 is triggered by reaching retirement age with at least five years of service. You generally receive one or the other for the same period, not both stacked.
Do small businesses have to pay it?
RA 7641 exempts retail, service, and agricultural establishments regularly employing not more than ten (10) employees. Outside that exemption, the minimum retirement pay applies where there is no equal or better plan.
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Boses ng kumakayod — your everyday rights as a Filipino worker on pay and dismissal: when your final/back pay must be released (DOLE Labor Advisory 06-20 — within 30 days of separation), 13th-month pay (PD 851 — 1/12 of your basic salary, on or before December 24), legal vs illegal salary deductions, unpaid wages and overtime, the twin-notice due-process rule before you can be dismissed, just causes vs authorized causes, separation pay, your Certificate of Employment (within 3 days of request), resignation notice, the regional minimum wage set by your RTWPB, and how to file with DOLE (SEnA conciliation first) or the NLRC.