HR tasks when an employee retires

Dear All,

One of our employees recently attained the retirement age of 58 (few months back). We just got to know that we need to follow certain procedures once an employee reaches retirement age. Request your kind guidance here:

  1. How do we inform the employee about his retirement date? Should this be recorded in email or a verbal communication with an employee will do?
  2. What are all the statutory requirements that we need to take care of?
  3. How do we handle salary process for?
  4. As per the advice from our statutory consultant, we need to process full and final settlement to this employee, relieve him and then hire him as consultant. Is this really needed? Can we allow him to continue as full time employee without processing any F&F? What does law say?
  5. Whether employee has to submit any resignation or documents?
  6. Also we do not have any retirement policy in place. How do we handle this situation.

Regards
Jaishree

1 Like

Hi Jaishree,

Let me answer your queries:

  1. You need to inform employees via email or on letter intimation in case employee doesn’t have email id and yes it should be recorded.
  2. We need to inform ESI PF and Gratuity as his separation due to retirement.
    3.You need to process his salaries along with his full and final settlement.
  3. I agree with your consultant. He is directing you correctly. If you still need his services to be continued then you can hire him as consultant.
    5.No, employee will not submit any resignation in case of retirement.
  4. not required any retirement policy , you can follow your standing order.

I hope I have answered all your queries,

Regards
Arpana

2 Likes

Dear Jaishree,

Pl. find below my views on your query:

It is better to have a HR policy wherein you can cover all these and when an employee joins, it shd be given to them to read and get their acknowledgement.

You need to have a list of employees who get completed 58 years next year and based on which, you can have a personal discussion before sharing it thro mail (there shd not be any sudden surprise).

Hope this may be of useful to you.

2 Likes

Thanks Arpana. Just wanted to understand the implication if we continue to engage the employee on a full time basis even after he attained retirement age.

Is there any law mandate to relieve him and hire as consultant? Kindly advice.

1 Like

Hi ,

Here I would say you can still continue as a full time employee but company liability will be same plus you need to fulfill all compliance instead taking him as consultant onboard will reduce company liability and no compliance need to maintain.

I am sure there will only one or two consultant you may be having like this not many so consultant option will be best in general.

Please go though with your standing order too to understand and act accordingly.

Regards
Arpana

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For now, he is part of our gratuity scheme. He opted out for PF at the time of joining (way back in 2010). Hence no PF contribution. He is also part of our group insurance coverage. Are we missing out on anything else? Could you please elaborate the compliance that we as an employer need to fulfill if we decide to continue his employment as it is.

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Hi,

Could you please let me know what your standing order say in terms of retirement age.

Regards
Arpana

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In terms of retirement age, it is just mentioned as 58 and nothing other than that

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Hi ,

You may proceed with his employment on rolls as I see no violation of law if he continues.

Regards
Arpana

2 Likes

Thank you so much Aparna. I really appreciate all your guidance provided so far.

Could anyone please clarify below:

  • Since our gratuity account is maintained with LIC, seems like LIC will provide coverage only till employees’ retirement age - 58years. Not sure how gratuity will work if we want to continue employment after employee attains 58years. Any insights on this ?

  • In case we want to rehire an employee on a full time basis after 58years (i.e. after settlement like gratuity etc), is company liable to cover such employees under gratuity.

  • Is there any provision to increase employees retirement age in LIC / Gratuity coverage?

1 Like

Gratuity will be an additional liability as you go year after year. They will expect an increment as other employees do.
Thank you. Regards

1 Like

Hi,

  1. Gratuity will pay until 58 years of age in case of death. Else, gratuity will pay until your service with the organization.
  2. Yes, even if you rehire after the age of 58 years.
  3. No, there is no provision to increase retirement age in Gratuity. Its all centralized so they follow one thumb rule.

Regards
Arpana

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