Forced retirement before age 65 is illegal dismissal
Before the age of 65, any employer who compels employees to retire shall be deemed guilty of illegal dismissal. Optional retirement at age 60 doesn’t mean it’s the option of the employer. The option belongs to the employee upon reaching 60 and after serving the company for at least five years.
This isn’t my opinion. This is the ruling of the majority of the entire 15-member Supreme Court, in the case of Alfredo Laya Jr. versus Philippine Veterans Bank, GR 205813, decided on January 10, 2018. The ruling was written by one of the most learned and erudite legal luminaries of the land, Chief Justice Lucas Bersamin, now the President of the GSIS. Of course, Justice Marvic Leonen dissented, and Law students taking the Bar this year should read his dissenting opinion, because this young jurist is this year's chairman of the Bar Exams. But the majority rules, of course. Thus, the more important document to remember is Bersamin's masterpiece.
The decision starts with a very succinct but categorical resolution: "An employee in the private sector who did not expressly agree to the terms of an early retirement plan cannot be separated from the service before the age of 65. The employer who retires the employee prematurely is guilty of illegal dismissal, and is liable to pay his backwages, and to reinstate him without loss of seniority and other benefits.” Can you imagine, this pertains to Laya who was the Bank's Vice President for Legal and its Chief Legal Officer? He knows the law, and still, the Supreme Court said that his signature on his appointment was not an explicit concurrence to the bank's early retirement plan. He was only 60 years old when he was forced to retire.
The decision clarified that when Laya reached 65 and the case was still pending, the backwages would stop. He was also awarded separation pay of 100% pay multiplied by his total number of years of service. The years when the case was litigated was to be included as years of service. This was a major victory of one man against the powers and influence of a big bank. Laya lost this case before the Labor Arbiter, the NLRC and the Court of Appeals. He first lost before the Supreme Court and lost again his first motion for reconsideration. Exceptionally, his second motion was given due course. He was already 71 when the good news came.
He was awarded the following: a.) Full backwages from July 18, 2007 when he was illegally retired until June 30, 2013 when he reached 65, plus 12% interest from July 18, 2007 to June 30, 2013, and 6% interest from July 1, 2013 to full satisfaction of judgment; b.) Separation pay at the rate of 100% of his monthly salary from hiring to retiring; c.) The bank was also ordered to pay the cost of the suit. Assuming that his last pay was P300,000, his backwages would be P23 million and P400,000. His separation pay would be (assuming 30 years of service) P9 million or a total of P32.4 million pesos tax-free.
The court also said that separation pay and retirement pay are not mutually exclusive. Assuming, Laya would still get retirement pay, of about P18 million, his total windfall would be P50.4 million pesos tax-free. This is a very good material for another John Grisham novel and movie. Or shall I write it myself?
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