Wage and Salary Problems

Can a Company Retire Employees Below Legal Age Limit?

As a rule, the compulsory age of retirement is 65 while optional retirement starts
at 60. Employers, however, are allowed to enter into agreements for early
retirement below these age limits but they must be able to show, if questioned
later, that their retirement plans or agreements were voluntarily accepted by the
employees.

Without proof of voluntary consent, a retirement made on the basis of this early
retirement plan may be considered invalid as a deprivation of property without
due process of law.

This was the Supreme Courts decision in a case where a company retired its
former clerk-typist at the age of 47 on the basis of a non-contributory retirement
plan which gave the company the option to retire employees who have rendered
at least 20 years of service.

After finding that the retirement plan was not embodied in a CBA or in any
employment contract or agreement freely consented by the employee, the
Supreme Court ruled that the early retirement was invalid and constituted illegal
dismissal. (Cercado vs. UNIPROM, Inc. GR No. 188154, Oct. 13, 2010)

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