How is retirement pay calculated for an employee?

Retirement pay is often calculated based on multiple components that reflect both the employee's monthly salary and their length of service. The correct method indicates that retirement pay consists of one-half of the monthly pay, service incentive leave, and thirteenth-month pay.

This approach ensures that the retirement pay aligns more closely with the worker's overall compensation and benefits accrued throughout their employment. By including service incentive leave, which typically represents benefits accumulated due to the employee’s accumulated leave days, the calculation acknowledges the value of the time invested in the company. The inclusion of thirteenth-month pay serves to enhance the retirement package further, as this is an additional benefit granted to employees, reinforcing the notion of reward for long-term service.

The combination of these factors in the calculation allows for a more comprehensive consideration of the employee's contributions and entitlements, reflecting both their monthly salary and various additional benefits earned during their tenure with the organization.