1) The short answer (with the right nuance)

Yes, it can happen—but it is not automatic. An employee may receive both separation pay and retirement pay when:

the employee has a legal or contractual right to separation pay (usually because the employer ended employment for an authorized cause or as a remedy in an illegal dismissal case), and
the employee also has a right to retirement pay (under the Labor Code/RA 7641 minimum retirement pay or under a company retirement plan/CBA), and
there is no valid rule in the retirement plan/CBA/employment contract saying that one benefit is “in lieu of,” “inclusive of,” or a substitute for the other, and there is no prohibited double recovery for the same purpose.

In many workplaces, employees are required to choose one (often the higher amount) because the retirement plan or the separation package clearly says it is in lieu of separation pay, or because what the employee received was designed to cover the same loss the law addresses through separation pay.

To understand when both are possible, you need to separate three things:

(A) what triggered the end of employment,
(B) what law or contract grants each benefit, and
(C) what the retirement plan/CBA says about overlap.

2) Key definitions: separation pay vs retirement pay

A. Separation pay (concept and purpose)

Separation pay is generally a statutory or court-awarded payment given because employment ended through causes recognized by law (commonly, termination by the employer for “authorized causes”) or because the law provides it as a substitute remedy (e.g., separation pay in lieu of reinstatement in illegal dismissal).

Its core policy idea is income support for a worker who loses a job under situations where the law treats the employee as not at fault, or where reinstatement is no longer practical.

B. Retirement pay (concept and purpose)

Retirement pay is a service-reward/benefit that becomes due when an employee “retires” under:

a retirement plan/CBA/employment contract, or
the statutory minimum retirement pay system (Labor Code retirement provision, as strengthened by RA 7641) when there is no retirement plan or when the plan provides less than the legal minimum.

It reflects a different policy idea: reward for length of service and support during retirement.

Because they serve different purposes, they can be cumulative in the right situation—unless the governing documents validly make them exclusive.

3) The legal foundations in Philippine labor law

A. Separation pay—where it usually comes from

Authorized causes (Labor Code Article 298, formerly Art. 283) Typical grounds:

Installation of labor-saving devices
Redundancy
Retrenchment to prevent losses
Closure or cessation of business (with rules depending on whether due to serious losses)

Disease (Labor Code Article 299, formerly Art. 284) Termination due to disease has special medical-certification requirements and a specific separation pay rule.
Illegal dismissal remedies (jurisprudence + Labor Code framework) When dismissal is illegal, the normal remedy is reinstatement + full backwages. If reinstatement is no longer feasible or appropriate, courts may award separation pay in lieu of reinstatement, plus backwages.

Important: “Separation pay” in illegal dismissal cases is not the same as statutory separation pay for authorized causes, but it functions similarly (a monetary substitute for returning to work).

B. Retirement pay—where it comes from

Retirement plan/CBA/employment contract If a plan exists, it generally controls retirement eligibility and benefits, but it should not provide less than the statutory floor when the law applies.
Statutory minimum retirement pay (Labor Code retirement provision, strengthened by RA 7641) This applies in the absence of a retirement plan or when a plan provides less than the minimum required.

4) Retirement pay in detail (Philippine private-sector minimum rules)

A. Default retirement ages and service requirement (statutory minimum)

When there is no retirement plan/CBA/employment contract fixing a different retirement age:

Optional retirement: at age 60 (employee may retire), and
Compulsory retirement: at age 65 (retirement becomes mandatory),
with at least 5 years of service (commonly treated as at least five years of employment with the employer).

A company plan/CBA can provide different terms (including earlier retirement age), and those terms can govern—subject to general standards of fairness and legality.

B. Who is covered / common exclusions

The minimum retirement pay system is primarily for private-sector employees. Government employees are under a different framework (civil service/GSIS). Certain small establishments have special statutory treatment (commonly discussed for certain retail/service/agricultural establishments with very small headcount), and domestic workers have their own legal framework.

C. Minimum retirement pay amount (the statutory floor)

The statutory minimum retirement pay is at least one-half (1/2) month salary for every year of service, with a fraction of at least six months counted as one whole year.

In Philippine labor practice, “one-half month salary” is commonly understood as:

15 days salary
+ 1/12 of the 13th month pay
+ the cash equivalent of up to 5 days service incentive leave (SIL) (where applicable)

This makes the statutory minimum retirement pay often more than just 15 days per year when computed in full.

D. What “salary” usually means for retirement computation

The computation typically uses the employee’s latest salary rate (and may include COLA and other pay components treated as part of wage), while excluding benefits that are not wage by nature. The exact inclusions can be fact-specific and sometimes litigated (e.g., whether certain allowances are integrated into wage because they are regular and unconditional).

5) Separation pay in detail (authorized causes and amounts)

A. Authorized causes (Labor Code Art. 298, formerly Art. 283)

Required procedure (in general):

Written notice to the employee(s) and to DOLE at least 30 days before the intended date of termination (common statutory due process requirement for authorized cause terminations).

Statutory separation pay amounts:

Installation of labor-saving devices: at least 1 month pay or 1 month pay per year of service, whichever is higher (commonly applied as 1 month per year).
Redundancy: at least 1 month pay per year of service.
Retrenchment to prevent losses: at least 1/2 month pay per year of service.
Closure/cessation of business not due to serious losses: at least 1/2 month pay per year of service.
Closure/cessation due to serious business losses/financial reverses: generally no separation pay is required by the authorized cause separation pay rule (though disputes often arise on whether the “serious losses” defense is proven).

A fraction of at least six months is usually counted as one year for separation pay computations.

B. Disease (Labor Code Art. 299, formerly Art. 284)

Termination due to disease has stricter conditions (commonly requiring medical certification that the illness cannot be cured within a reasonable time and continued employment is prejudicial or prohibited).

Separation pay for disease termination is typically:

at least 1 month salary or 1/2 month salary per year of service, whichever is higher.

C. When separation pay is generally not owed

Just causes (Labor Code Art. 297, formerly Art. 282) such as serious misconduct, willful disobedience, gross and habitual neglect, fraud/breach of trust (for positions of trust), commission of a crime against the employer or immediate family, and analogous causes: no statutory separation pay.
Resignation: no statutory separation pay (unless a contract, CBA, or company policy grants it).

That said, courts have, in limited situations and depending on circumstances, awarded some form of financial assistance or separation pay as an equitable measure—but this is not a guaranteed right and is not the standard rule.

6) So when can an employee get both separation pay and retirement pay?

Core idea: different triggers, different purposes—unless documents make them exclusive

An employee can potentially receive both if:

separation pay is due because the employer terminated employment under a legal ground that requires separation pay (or because a court awarded separation pay in lieu of reinstatement), and
retirement pay is due because the employee meets retirement eligibility under law or the retirement plan, and
the governing retirement plan/CBA/contract does not say retirement benefits are in lieu of separation pay (or vice versa), and there is no valid waiver.

The “in lieu of” clause is often the deciding factor

Many retirement plans, redundancy programs, and separation packages contain language like:

“This benefit is in lieu of any other separation benefits,”
“This package is inclusive of statutory separation pay,” or
“Employee shall receive either retirement benefit or separation pay, whichever is higher.”

If such a clause exists and is enforceable, the employee commonly ends up with only one benefit (or the higher of the two), not both.

A practical decision framework (most common scenarios)

Scenario 1: Termination for redundancy/retrenchment/closure + employee is retirement-qualified

Separation pay: generally due (unless closure due to proven serious losses).
Retirement pay: may also be due if the employee is eligible under law/plan at the time employment ends.
Result: Possible to receive both, unless the plan/package says retirement is in lieu of separation pay or requires an election.

This is one of the most common real-world overlap situations: the employee loses the job involuntarily (triggering separation pay) while also meeting retirement eligibility.

Scenario 2: Voluntary retirement (employee chooses to retire)

Retirement pay: due (under plan or statutory minimum if applicable).
Separation pay: generally not due because the termination is by retirement, not an authorized-cause termination by the employer.
Result: typically retirement pay only.

Scenario 3: Compulsory retirement (age-based retirement under plan or default rules)

Retirement pay: due.
Separation pay: generally not due (unless there is an independent authorized cause termination alongside the retirement, which is uncommon).
Result: typically retirement pay only.

Scenario 4: Termination for just cause (employee fault-based dismissal) but employee is otherwise retirement-eligible

Separation pay: generally not due.
Retirement pay: usually not due under the minimum statutory retirement concept because the employee was not retired; entitlement depends heavily on the retirement plan’s terms (some plans deny benefits if separated for cause; others may have vesting rules).
Result: typically neither, unless the plan grants some benefit even on dismissal.

Scenario 5: Illegal dismissal + separation pay in lieu of reinstatement + employee is retirement-qualified

Courts may award separation pay in lieu of reinstatement and backwages.
If the employee is also entitled to retirement benefits under the plan/law (depending on timing and plan terms), the question becomes whether awarding both leads to prohibited duplication or is allowed by the plan and the nature of the awards.
Result: can be complex; outcomes depend on how the remedies are characterized and whether the plan or circumstances justify both without double recovery.

Scenario 6: Company offers an “early retirement” or “enhanced separation” program during restructuring

Employers often present a package labeled “early retirement” that is really an exit incentive during redundancy/reorganization. The documents often state it is in lieu of statutory separation pay.

If the package clearly states it is inclusive/in lieu, and the employee accepts under valid terms, the employee usually cannot later demand additional statutory separation pay on top of the package, unless the waiver is invalid or the package is actually less than what the law requires for the ground used.

7) Comparing amounts: why employees are often made to choose

Because the formulas differ, one benefit may be significantly higher.

A. Typical statutory separation pay vs minimum retirement pay

Redundancy: 1 month pay per year of service
Minimum retirement pay: 1/2 month salary per year of service (but “1/2 month” is computed in a special way that can exceed 15 days)

In many cases, redundancy separation pay is higher than minimum retirement pay, so employers may either:

pay redundancy separation pay only, or
pay retirement pay only if the plan says it replaces separation pay, or
pay whichever is higher, if the plan or company policy provides an election rule.

B. Fractions of service

For both separation pay and retirement pay computations, a fraction of at least six months is commonly treated as one whole year.

8) What else is paid at end of employment (separate from both)

Whether separation/retirement is paid or not, employees commonly still have claims to “final pay” items, such as:

unpaid salaries
proportionate 13th month pay
unused service incentive leave conversion (if applicable)
other earned benefits under company policy/CBA
tax refunds/adjustments (as applicable)

These are distinct from separation pay and retirement pay and are not normally “alternatives” to them.

9) Tax treatment (often overlooked, frequently disputed)

A. Separation pay taxability (general treatment)

In Philippine tax practice, separation pay due to involuntary separation (e.g., redundancy, retrenchment, closure beyond the employee’s control, sickness/disability) is commonly treated as excluded from gross income (i.e., not subject to income tax), while separation pay due to voluntary resignation is generally taxable.

Actual tax treatment can depend on the factual cause and how the payment is characterized and documented.

B. Retirement pay taxability

Retirement benefits may be tax-exempt depending on:

whether it is paid under the statutory retirement framework, and/or
whether it is paid under a BIR-approved reasonable private benefit plan, and
whether statutory conditions for exemption are met (commonly involving minimum age, years of service, and one-time availing rules for certain retirement plan exemptions).

Because tax consequences depend heavily on documentation (e.g., whether the employer treats the separation as involuntary, whether the plan is BIR-approved, and whether the employee has previously availed retirement exemption), this is an area where classification matters.

10) Common legal pressure points in disputes

A. Mislabeling the ground of termination

Sometimes employers call it “retirement” to avoid paying separation pay for redundancy/closure, or call it “resignation” to avoid both. In disputes, the true nature of the termination is assessed based on facts and documents.

B. Validity of “quitclaims” and waivers

Employees may sign releases upon receiving a package. In labor disputes, quitclaims are not automatically invalid, but they can be rejected if shown to be:

not voluntary,
unconscionable,
executed under fraud, mistake, intimidation, or undue pressure,
or if the consideration is grossly inadequate compared to what the law requires.

C. Whether the plan truly says “in lieu of”

Ambiguous plan language often triggers litigation. Clear drafting matters:

“in lieu of separation pay” tends to foreclose cumulation,
“without prejudice to statutory benefits” tends to support cumulation.

D. Computation disputes

Frequent issues:

what counts as “salary” (basic pay only vs inclusive of COLA and regularly paid allowances),
rounding of years of service,
inclusion/exclusion of SIL conversion components in retirement computation,
and which salary rate applies (latest salary vs average, especially for variable pay structures).

11) A practical matrix: when both are most likely vs least likely

Most likely to receive both (subject to plan wording):

Termination for authorized cause (especially redundancy) and the employee is retirement-eligible, and the retirement plan/CBA does not make benefits exclusive.

Less likely / usually only one:

“Early retirement” packages that expressly state in lieu of statutory separation pay (often the employee gets the package only).
Pure voluntary retirement (retirement pay only).

Usually not both (and sometimes neither):

Just-cause dismissal (generally no separation pay; retirement depends on plan terms and may be denied).

12) Bottom line

In the Philippines, separation pay and retirement pay are legally distinct benefits that can, in the right circumstances, be both payable—but whether an employee can actually collect both in one exit depends on (1) the cause of termination, (2) retirement eligibility at the time of separation, and (3) the governing retirement plan/CBA/contract language and any valid waiver.