In the Philippine labor landscape, the distinction between "regular" employees and those categorized as "casual" or "on-call" often leads to confusion regarding statutory benefits. One of the most significant points of contention is the entitlement to retirement pay. Under Republic Act No. 7641 (The Retirement Pay Law), which amended Article 287 of the Labor Code, the mandate for retirement benefits is broader than many employers—and employees—realize.

The Governing Law: RA 7641 and the Labor Code

Article 302 (formerly 287) of the Labor Code establishes that in the absence of a retirement plan or agreement in an establishment, an employee, upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years (the compulsory retirement age), who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay.

Coverage: Who is Included?

The law applies to all employees in the private sector, regardless of their position, designation, or method of compensation. This includes:

Casual Employees: Those performing work that is not usually necessary or desirable in the usual business of the employer, but who have rendered at least one year of service.
On-Call/Intermittent Employees: Those whose work is not continuous but occurs at intervals.
Part-time Employees: As clarified by the Department of Labor and Employment (DOLE), the law does not distinguish between full-time and part-time employment.

The "Five-Year" Service Requirement

The critical threshold for eligibility is five years of service. For casual and on-call employees, "service" is often misinterpreted. Under the law, "one year of service" is defined as service within 12 months, whether continuous or broken, provided the employee has worked for at least six months within that period, unless the employment contract provides for a shorter period.

Calculating Retirement Pay for Non-Regular Staff

The minimum retirement pay is equivalent to one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

In the context of RA 7641, the "one-half month salary" is specifically defined to include:

Fifteen (15) days salary based on the latest salary rate.
Five (5) days of Service Incentive Leave (SIL).
One-twelfth (1/12) of the 13th-month pay.

Note: For employees who do not receive SIL (such as those already receiving at least five days of paid vacation leave), the 5-day SIL component is excluded from the calculation.

Key Legal Jurisprudence and Principles

1. The Principle of Regularization by Operation of Law

Under Article 295 of the Labor Code, a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed, shall be considered a regular employee with respect to that activity. Consequently, they are entitled to all benefits of regular employment, including retirement pay.

2. The "Project Employee" vs. "Casual" Distinction

If an on-call or casual employee is repeatedly rehired for the same tasks over several years, the Supreme Court often views this as evidence of the necessity of their work to the business. This "length of service" often bridges the gap between casual status and retirement eligibility.

3. Exemptions to the Rule

Not all employers are mandated to pay the RA 7641 retirement benefit. The following are exempt:

Retail, service, and agricultural establishments regularly employing not more than ten (10) employees.
Government agencies (covered by the GSIS).

Common Misconceptions

"Only Regulars get Retirement": This is false. The law looks at the "employer-employee relationship" and the "years of service," not the label on the contract.
"The 5-Year Gap": If an on-call employee has gaps in service, those years still count toward the five-year total if they were employed for at least six months in each of those years.
"Waivers": Any waiver or quitclaim signed by an employee at the start of employment renouncing their right to retirement pay is generally considered "void ab initio" (void from the beginning) as it contravenes public policy.

Summary Table: Eligibility Criteria

Criteria	Requirement under RA 7641
Age	60 (Optional) to 65 (Compulsory) years old.
Tenure	At least 5 years of service with the same employer.
Employment Status	Includes casual, on-call, part-time, and regular.
Employer Size	Must employ more than 10 workers (for retail/service).