RETIREMENT BENEFITS SHOULD BE GRANTED THE RETIRABLE EMPLOYEE ALTHOUGH AWARDED SEPARATION PAY

Retirement benefits are a form of reward for an employee’s loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts and company policies.

Lino A. Fernandez, Jr. vs. Manila Electric Company (MERALCO)
G.R. No. 226002, June 25, 2018

See the facts of the case and rulings of the lower tribunal here

SC Ruling:

Fernandez must receive the retirement benefits he should have received if he was not illegally dismissed. Even if he receives a separation pay in lieu of reinstatement, he is not precluded to obtain retirement benefits because both are not mutually exclusive

The SC held that retirement benefits are a form of reward for an employee’s loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts and company policies. On the other hand, separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment and is recoverable only in instances enumerated under Articles 283 and 284 [now 298 and 299] of the Labor Code or in illegal dismissal cases when reinstatement is not feasible.

The Labor Code of the Philippines 2018 Edition (re-numbered and updated)