In the Philippine labor landscape, the security of tenure is a constitutionally protected right. This protection extends to the twilight of a worker’s career, ensuring that the transition into retirement is governed by law rather than the whim of an employer. Conversely, the law also protects employees from "constructive dismissal"—a tactic often employed via illegal demotions to force a resignation before retirement age is reached.

I. Mandatory Retirement: The Legal Framework

Retirement in the Philippines is primarily governed by Republic Act No. 7641, which amended Article 287 of the Labor Code.

1. The Retirement Age

Under the law, there are two types of retirement ages:

Optional Retirement: An employee may retire upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years, provided they have served at least five (5) years in the establishment.
Compulsory Retirement: Retirement is mandatory when the employee reaches the age of sixty-five (65) years.

2. The Role of the Retirement Plan

The law serves as a "floor," not a "ceiling." If there is an existing Collective Bargaining Agreement (CBA) or an employment contract that provides for a retirement age lower than 65, that agreement is generally valid and enforceable. However, the Supreme Court has consistently ruled that for a mandatory retirement age lower than 65 to be valid, the employee must have voluntarily consented to it at the time of hiring or through the CBA.

3. Retirement Pay Calculation

In the absence of a retirement plan, the minimum retirement pay required by law is:

One-half (1/2) month salary for every year of service.
A fraction of at least six (6) months is considered as one (1) whole year.
The "one-half month salary" must include:
15 days salary based on the latest salary rate.
Cash equivalent of 5 days of service incentive leave.
1/12 of the 13th-month pay.
Totaling approximately 22.5 days per year of service.

II. Protections Against Illegal Demotion

Demotion occurs when an employee is moved to a lower position with a decrease in duties, responsibilities, or status, often accompanied by a reduction in pay. While employers have "management prerogative" to regulate all aspects of employment, this is not absolute.

1. The Test of Validity

For a demotion to be legal, the employer must prove:

Just Cause: Such as gross and habitual neglect of duties, serious misconduct, or incompetence.
Due Process: The employee must be given a chance to explain why they should not be demoted (Notice and Hearing).

2. Constructive Dismissal

If a demotion is unjustified, it is legally characterized as constructive dismissal. This occurs when the employer creates an environment so hostile, or makes a change in the employment terms so prejudicial (like a demotion without cause), that the employee is effectively forced to quit.

The Supreme Court defines this as a "quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank or a diminution in pay."

3. Protection for Senior Employees

In the context of retirement, some employers may attempt to demote an older employee to reduce the "latest salary rate" used to calculate retirement pay. Philippine jurisprudence is strict on this: a demotion intended solely to circumvent the payment of full retirement benefits is a badge of bad faith and is illegal.

III. The Intersection: Forced Retirement as Illegal Dismissal

"Mandatory retirement" before the age of 65 is only legal if there is a prior agreement. If an employer forces an employee to retire at 55 or 60 without a pre-existing contract or CBA clause, it is not "retirement" in the eyes of the law; it is illegal dismissal.

IV. Remedies for the Employee

If an employee is subjected to an illegal demotion or forced into premature retirement, they may file a complaint with the National Labor Relations Commission (NLRC).

Issue	Potential Remedies
Illegal Demotion	Reinstatement to the former position, payment of salary differentials, and moral damages.
Illegal Dismissal (Forced Retirement)	Reinstatement without loss of seniority rights and full backwages.
Underpayment of Retirement	Payment of the deficiency plus legal interest and attorney's fees.

V. Key Takeaways for Employers and Employees

For Employers: Ensure that any retirement policy stipulating an age lower than 65 is clearly signed and consented to by the employee upon regularization. Documentation of performance issues is vital before initiating any demotion to avoid "constructive dismissal" claims.
For Employees: Security of tenure does not expire until the age of 65 unless you have signed a valid agreement otherwise. Any sudden move to a lower rank or lower pay without a disciplinary process is a violation of your labor rights.