Can an employer retire an employee at 60?

Only if a retirement plan or agreement that the employee voluntarily agreed to allows it. Without one, 60 is the earliest age the employee may choose to retire, and 65 is the compulsory retirement age under Article 302 of the Labor Code.

What happens if an employee is retired early without consent?

The Supreme Court treats it as illegal dismissal. In the recent cases, the employer had to pay backwages, separation pay in place of reinstatement, and retirement benefits counted up to age 65.

Does accepting retirement benefits mean the employee agreed to retire early?

No. In Pulong v. Super Manufacturing (2019), the Supreme Court held that receiving benefits under a plan is not the same as consenting to early retirement.

What is the minimum retirement pay in the Philippines?

Without a better plan, an employee who retires at 60 to 65 with at least five years of service gets at least one half month salary per year of service. This works out to 22.5 days of pay per year of service.

Can You Retire an Employee at 60? What the Supreme Court Just Said

On October 27, 2026, the Supreme Court released a decision that every HR head and business owner should take note of. The message is simple. An employee cannot be retired before age 65 unless they clearly and voluntarily agree to it.

This is not a new rule. But it is a good reminder, and a good time to take a closer look at your own retirement plan.

What happened

Rodolfo Ondevilla joined Colegio de San Juan de Letran in Laguna in 2004 as comptroller. He later became assistant vice president for finance. In August 2019, when he turned 60, the school treated his appointment as expired and ended his employment.

He filed a complaint for illegal dismissal. The Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals all ruled that he was illegally dismissed. The Court of Appeals, however, read one of his letters as an agreement to retire in 2020.

The Supreme Court’s First Division disagreed. That letter was his reply to the school’s demand that he pay back a cash advance. It was not a decision to retire. The school had also never offered him a retirement plan that he could accept or reject.

What the Court ruled

Without his consent, the early retirement was an illegal dismissal. Ondevilla was awarded full backwages, separation pay in place of reinstatement, and retirement benefits covering his service up to the day he turned 65.

The Court explained why consent matters so much. When an employee accepts early retirement, they give up their security of tenure. So the employee “must freely and expressly agree to it, without pressure or coercion.”

The rule on retirement age

Under Article 302 of the Labor Code (formerly Article 287), the retirement age is set by the retirement plan, employment contract, or collective bargaining agreement. If there is none, the law fills the gap:

60 is the earliest age an employee may choose to retire, as long as they have at least five years of service.
65 is the compulsory retirement age.
Retirement pay is at least one half month salary for every year of service. The law counts this as 15 days of salary, plus one twelfth of the 13th month pay, plus up to five days of service incentive leave. In practice, that comes to 22.5 days of pay per year of service.

The key point is that 60 is the employee’s option, not the employer’s. An employer can only retire someone earlier than 65 if there is a plan or agreement that the employee actually agreed to. For more on the minimum benefit, see our guide to the Retirement Pay Law.

The Court has said this before

The Ondevilla ruling builds on a line of decisions that all point the same way.

Cercado v. Uniprom (2010). An early retirement plan must be voluntarily agreed to by the employees, or by a majority of them through their bargaining representative.
Laya v. Philippine Veterans Bank (2018). Signing an employment contract does not by itself mean the employee agreed to an early retirement plan.
Pulong v. Super Manufacturing (2019). This one deserves a closer look.

In Pulong, the company did have a retirement agreement. It set retirement at 60, and it was signed by three workers who said they represented the rest. When Guido Pulong, a die setter who had been with the company since 1978, was handed his retirement papers past 60, he refused to sign. He wanted to work until 65. Thirteen of his coworkers also swore that they never authorized the three signatories.

The Supreme Court ruled in his favor. The agreement did not bind him because the company could not prove the signatories had authority. And the fact that workers had received benefits under the agreement did not mean they consented to retiring early. The Court also made an important distinction. An employer may decide on its own when to use an early retirement option, but it cannot decide on its own to adopt one. Adopting it takes the employees’ agreement.

Pulong was awarded backwages until age 65, separation pay, retirement pay, attorney’s fees, and legal interest.

What this means for employers

The Ondevilla case is the simple one. There was no plan at all. The Pulong case is the one more companies should worry about. There was a plan, and it still did not hold up, because the consent behind it was weak.

So having a retirement plan is not enough. You need to be able to show that your employees actually agreed to its retirement terms. A few practical steps:

Put your retirement plan in writing. State the normal retirement age and the terms for early retirement clearly.
Get a clear acknowledgment from each employee. A general line in the employment contract may not be enough. The acknowledgment should point to the retirement terms themselves.
Check who signed for your workers. If the plan was agreed with a union or employee representatives, make sure they were properly authorized.
Do not treat benefits as consent. An employee receiving plan benefits is not the same as an employee agreeing to retire early.

Getting this wrong is costly. In both cases, the employer ended up paying backwages, separation pay, and retirement benefits counted all the way to age 65, on top of legal costs.

Know what you owe your people

Every company with employees carries a retirement obligation, even without a formal plan. The Labor Code sets the minimum, and it grows each year your people stay with you. As these cases show, it can grow even more when retirement is handled the wrong way.

An actuarial valuation for funding tells you how large that obligation is today and how much you need to set aside each year to meet it. It turns a cost you might only see when someone retires into one you can plan for.

Once you know the number, consider setting up a retirement trust fund. A funded plan does three things for you:

It gives your employees security. Their retirement pay is set aside in a trust, separate from company funds, so it will be there when they need it.
It spreads the cost over time. You build the fund year by year instead of paying large amounts from cash when people retire.
It comes with tax benefits. Contributions to a BIR registered plan funded through a trust are generally tax deductible for the company. Retirement pay under a BIR approved plan can also be income tax free for employees who retire at 50 or older with at least 10 years of service with the company. See our guide to tax free retirement benefits under RA 4917.

Questions to ask yourself

Do we have a written retirement plan, or are we relying on the default rules of the Labor Code?
Does our plan state the retirement age and what happens before 65?
Can we show that each employee agreed to those terms?
If representatives signed on behalf of our workers, were they authorized?
Do we know how much we owe our people in retirement benefits today?
Is that obligation funded, or will we pay it from cash when people retire?
When did we last review our plan?

If you are unsure about any of these questions, we would be glad to help. Our team can review your retirement plan with you, prepare an actuarial valuation for funding, and look at options that fit your people and your business. Email us at marketing@zalamea.ph to set a meeting with our team.

This article is for general information only and is not legal advice.

Sources: Supreme Court of the Philippines, SC Employees Cannot Be Forced to Retire Early Without Their Consent; The Chronicle, SC: Employees cannot be forced to retire early without their consent; Pulong v. Super Manufacturing Inc., G.R. No. 247819, October 14, 2019; Philstar, Forcing employees to retire before 65 illegal; Article 302 of the Labor Code; Republic Act No. 4917.