Not mutually exclusive

Can an employee be entitled to the payment of both retirement pay and separation pay? This is the issue raised and resolved in this case of Angie.

Angie had been employed by an international tire company (GPI) as secretary to the manager of Quality and Technology for almost 35 years already and was 57 years old when she received notice that her service is being terminated due to redundancy. GPI explained that it was streamlining its workforce as a cost cutting measure due to economic reversals. In its letter GTI informed Angie that “as Company practice, termination due to redundancy or retrenchment is paid at 45 days per year of service.” But “considering that you have reached 34.92 years of service and have reached the required minimum age of 55 to qualify for early retirement, Management has decided to grant you early retirement benefits pegged at 47 days for every year of service.”

Angie however asked she be paid an additional 3 days or a total of 50 days for every year of service as premium to encourage employees to avail of early retirement benefits. But GPI insisted on its computation. So Angie accepted the checks which covered payment of her retirement benefits computed at 47 days for every year of service but put an annotation of “received under protest” in the acknowledgment receipt because she was also claiming her separation pay as mandated by law since her service was terminated due to redundancy.

 In view of this annotation and of Angie’s refusal to sign a Release and Quitclaim, GPI took back the checks. GPI explained that it had already offered her the most favorable separation benefits due to redundancy because based on the CBA she would be entitled at most to only 45 days for every year of service.

In reply Angie reiterated her claim for both termination pay and early retirement benefits and demanded that she be given a copy of the provision in the Retirement Plan, the CBA and Employment Contract which prohibits the grant of both to a separated employee. However GPI brushed aside her demands and merely reminded her to claim her checks.

So Angie had to finally accept the check in the amount of P1,958,927.89 purportedly inclusive of all termination benefits computed at 47 days for every year of service. She likewise signed the Release and Quitclaim in favor of GPI. But after about two weeks she filed a complaint against GPI before the Labor Arbiter (LA) for illegal dismissal with claims for separation pay, damages and attorney’s fees.

In its position paper, GTI asseverated that her receipt of early retirement benefits equivalent to 47 days for every year of service, which is higher than the regular separation pay, had effectively barred her from recovering separation pay due to redundancy; and that under the CBA (Section 1, Article XI), the employee shall be entitled to only one benefit, whichever is higher and that availment of retirement benefits shall exclude entitlement to any separation pay.

But in her rejoinder Angie presented a copy of the latest CBA showing that the provisions alluded to by GTI do not exist. In contrast she pointed to Section 5, Article VIII of the latest CBA showing that the amount paid to her was her early retirement benefit under the retirement plan for a worker who is at least 50 years and with at least 15 years of service.

The LA however ruled in favor of GTI and dismissed Angie’s complaint. It declared that the amount she received from the company was actually payment of separation pay due to redundancy computed under the CBA’s retirement plan since the same was more advantageous to her. The LA held that the grant of both the retirement and separation pays is not allowed under the Retirement Plan/CBA. This ruling was affirmed by the NLRC upon appeal by Angie. Were the LA and NLRC correct?

Both the Court of Appeals and the Supreme Court said no. An employee is entitled to recover both the separation pay and retirement benefits in the absence of a specific provision in the Retirement plan or CBA. The CBA cited by GTI can hardly be considered as substantial evidence. There is no showing that it was the one in force at the time material to the case. On the other hand Angie presented the parties’ latest CBA and upon examination of the same, it does not really contain any restriction on the availment of benefits under the company’s retirement plan and of separation pay.

Moreover GTI’s letter of termination shows that it merely granted Angie her early retirement benefits based on her length of service with the company and her age which qualified her for early retirement. In fact it even stated that the amount would come from the company’s Pension Fund. Even the detailed account of her termination benefits is titled “Summary of Retirement Pay and other Company Benefits.” And contrary to GTI’s contention, Angie qualifies for early retirement under the Company’s retirement plan because she was already 57 years and in the service for more than 34 years.

Retirement benefits and separation pay are not mutually exclusive. Retirement benefits are rewards for an employee’s loyalty and service to an employer and are earned under existing CBA, employment contracts and company policies. Separation pay is the amount which an employee receives at the time of severance from employment designed to provide the employee wherewithal during the period that he is looking for another employment and is recoverable in instances enumerated under Article 283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. In this case, Article 283 clearly entitles Angie to separation pay apart from retirement benefits (Goodyear Phils., Inc. et al. vs Angus, G.R. 185449, November 17, 2014).

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