Bane of forced retirement

RETIREMENT HAS been romanticized as a person’s reward for long faithful service to an employer, whether public or private.

It is meant to give the retiree, while still physically fit, a chance to smell the flowers and enjoy the fruits of his labor in the company of his loved ones.

This assumes that his retirement was well planned and he received a hefty going-away present from his employer. But it ceases to be a happy event or something to look forward to if it is involuntary or made under unpleasant circumstances.

This was the situation an employee found herself in a case the Supreme Court recently decided which is docketed as “Lourdes Cercado vs. Uniprom Inc.,” G.R No. 188154, dated Oct. 13, 2010.

In 1978, Cercado was employed by the company as a ticket seller. She was later promoted to cashier and clerk typist.

On April 1, 1980, the company implemented a retirement plan which provides that “any participant with 20 years of service, regardless of age, may be retired at his option or at the option of the company.”

In December 2000, the company exercised that option and retired 41 employees, including Cercado who, at that time, was 47 years old and had been employed for 22 years. Her retirement was to take effect on Feb. 15, 2001.

Exercise

She rejected the P171,982.80 early-retirement check offered by the company. On the scheduled retirement date, the company issued a check worth P100,811.70 representing her retirement benefits under the regular retirement package. Again, she refused to accept it.

With this refusal, the company did not give Cercado any work assignment after February 15. In turn, she filed a complaint for illegal dismissal on the ground that the company did not have a bona fide retirement plan and, even if it had, she did not consent to it.

The company argued that she was automatically covered by the retirement plan when she agreed to the company’s rules and regulations, and that her retirement was a valid exercise of management prerogative.

The labor arbiter ruled in Cercado’s favor and ordered her reinstatement with full backwages, and which decision was later affirmed by the National Labor Relations Commission.

On appeal to the Court of Appeals, the court set aside the two decisions and declared the “retirement as valid and legal being in conformity with the [company’s] Retirement Plan.”

Undaunted, Cercado elevated the case to the Supreme Court for final resolution.

Prerogative

The tribunal stated that “retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the emplo-yee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.”

It cited Article 287 of the Labor Code, which specifies 65 years as the age for compulsory retirement and 60 years for optional retirement. This age benchmarks, however, do not prohibit the employer from setting an earlier retirement age.

The tribunal said that although in past decisions it had upheld the validity of the employer’s action in lowering the retirement age, the plans involved resulted from bilateral negotiations between the employers and employees.

Those plans were “either embodied in a CBA or established after consultations and negotiations with the employees’ bargaining representative.

The consent of the employees to be retired even before the statutory retirement age of 65 years was thus clear and unequivocal.”

The tribunal stressed that without such assent to and acceptance of lower retirement ages, the imposition of the retirement plan “will amount to a deprivation of property without due process of law.”

Acceptance

In the instant case, the evidence showed that Cercado did not voluntarily agree or accept the company’s early retirement plan.

The tribunal pointed out that the plan “is not embodied in a CBA or in any employment contract or agreement assented to by the petitioner and her co-employees. On the contrary, Uniprom’s Employees Non-Contributory Retirement Plan was unilaterally and completely imposed on them.”

For an early-retirement plan to be binding, the employee’s acceptance should “be explicit, voluntary, free and uncompelled.”

Neither can it be said that the retirement plan is part of Cercado’s employment contract because the plan was instituted two years after she joined the company and therefore it cannot be considered part of her contract.

The tribunal also debunked the argument that her consent can be inferred from her signature in its personnel action forms which contain the phrase: Employee hereby expressly acknowledges receipt of and undertakes to abide by the provisions of his/her Job Description, Company Code of Conduct and such other policies, guidelines, rules and regulations the company may prescribe.

Finding these forms as related to salary increases only, the tribunal said “voluntary … acceptance by an employee of an early retirement age option in a retirement plan necessarily connotes that her consent specifically refers to the plan or that she has at least read the same when she affixed her conformity thereto.”

Thus, after nine long years, it was sweet victory for Cercado who was ordered reinstated with full backwages.

In the wake of this decision, it would be a good idea for companies, labor unions and employees concerned to take a close look at their early-retirement plans, if any, to see if they conform to the criteria laid down by the tribunal. –Raul J. Palabrica, Philippine Daily Inquirer

(For feedback, please write to rpalabrica@inquirer. com. ph.)