The Labor Code sets a minimum retirement benefit: one-half month salary for every year of service, from age 60, after at least five years with the employer.
"One-half month salary" is the phrase that misleads, because the law does not leave it to its ordinary meaning. It defines it as fifteen days, PLUS one-twelfth of the 13th month pay, PLUS the five days of service incentive leave — which comes to 22.5 days, half as much again as the fifteen it sounds like.
The other place figures go wrong is the daily rate. It is your annual salary over your paid days in a year, not your monthly salary over thirty. On a Monday-to-Friday schedule the two differ by nearly 38%, and the gap multiplies through every year of service.
Because "one-half month salary" is defined in the law rather than left to its ordinary meaning. It is fifteen days, plus one-twelfth of the 13th month pay, plus the five days of service incentive leave — 15 + 2.5 + 5 = 22.5. A calculator that reads "half a month" literally pays fifteen days and is short by a third.
From 60, if you have served at least five years. 65 is the compulsory retirement age. Below 60 there is no statutory entitlement, though this page still shows what the figure would be so you can plan.
Whichever is better governs. The law sets a floor, not a ceiling, so a plan that pays more than the statutory minimum is what applies — and a plan that pays less does not override the law. Enter your plan total and this page will tell you which one governs.
No, and this is where most hand-worked figures go wrong. The daily rate comes from your annual salary divided by your paid days in a year. At ₱30,000 a month on a Monday-to-Friday schedule that is ₱1,379.31, not ₱1,000 — nearly 38% higher, and it multiplies through every year of service.
A fraction of at least six months counts as a whole year, the same rule separation pay uses. It can also carry you over the five-year threshold, which is the difference between an entitlement and none at all.
Retirement benefits under a BIR-registered plan, or under the Labor Code where the conditions are met, are generally exempt — but the conditions matter and this tool does not model them. The figure here is gross.
Retail, service and agricultural establishments regularly employing not more than ten employees are exempt from the retirement pay law, as are government employees, who are covered by GSIS rules instead.
The total comes from the unrounded yearly figure. Rounding ₱31,034.475 to the centavo first and then multiplying would pay that rounding once for every year of service.
This is an estimate of the statutory minimum, not legal advice. A company retirement plan may provide more, and the tax treatment is not modelled. Nothing you type here is sent to our servers — the calculation runs entirely in your browser.
