Dear All,
I have one employee who is retiring on 31st May 2017 from the Office Assistant position. Management wants to extend his regular employment by one more year, and as per company policy, our retirement age is 60 years.
Could you please help me understand if we can extend his regular employment by one year? We prefer not to put him on a contract as he needs to file his income tax return for the 10% TDS deduction, which he has not done during his tenure.
Best Regards,
Sunil G
Pune
From India, Pune
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3I have one employee who is retiring on 31st May 2017 from the Office Assistant position. Management wants to extend his regular employment by one more year, and as per company policy, our retirement age is 60 years.
Could you please help me understand if we can extend his regular employment by one year? We prefer not to put him on a contract as he needs to file his income tax return for the 10% TDS deduction, which he has not done during his tenure.
Best Regards,
Sunil G
Pune
From India, Pune
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First things first, the Industrial Employment (Standing Orders) Act, 1946 stipulates the age of retirement as 58. Although a retirement age of 60 may not be frowned upon by labor authorities.
If you wish to continue his services after retirement, you cannot definitely appoint him as an employee. The only way is to appoint him as a consultant. TDS will have to be deducted on the monthly payment made; there is no choice unless you circumvent the laws.
From India, Mumbai
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If you wish to continue his services after retirement, you cannot definitely appoint him as an employee. The only way is to appoint him as a consultant. TDS will have to be deducted on the monthly payment made; there is no choice unless you circumvent the laws.
From India, Mumbai
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Dear Sunil,
You can extend the service of an employee who has attained the age of superannuation/retirement by specific appointment letter, mentioning the terms and conditions of the appointment. The retired employee can withdraw his EPF and avail EPS provided he is eligible. You need not cover him under EPF; he becomes an excluded employee. If there is continuity of service, gratuity is liable to be paid after completion of 1 year of service. If there is no continuity of service, his accounts/full and final including gratuity are to be paid.
If he is covered under ESI, he will continue to be covered irrespective of age/retirement, provided his monthly gross salary is Rs 21,000 and below.
From India, New Delhi
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You can extend the service of an employee who has attained the age of superannuation/retirement by specific appointment letter, mentioning the terms and conditions of the appointment. The retired employee can withdraw his EPF and avail EPS provided he is eligible. You need not cover him under EPF; he becomes an excluded employee. If there is continuity of service, gratuity is liable to be paid after completion of 1 year of service. If there is no continuity of service, his accounts/full and final including gratuity are to be paid.
If he is covered under ESI, he will continue to be covered irrespective of age/retirement, provided his monthly gross salary is Rs 21,000 and below.
From India, New Delhi
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Dear All,
What the law prescribes is the minimum or the higher limit. For example, minimum wages are the minimum; the employer can pay more than that but not less. Working hours are a maximum of 48 in a week; the employer can prescribe a 36-hour week but not more than 48 hours a week. Similarly, under Standing Orders, the age of superannuation can be 60, but the employer can increase it to any extent. The employer cannot do the contrary, i.e., the employer cannot superannuate an employee earlier than 60 years if that is the age of superannuation.
As for ESI, PF, Bonus, Gratuity, etc., the relevant provisions in that act will apply. These two things are separate and need not be mixed with each other.
Vibhakar Ramtirthkar
snehvibha@yahoo.com
From India, Pune
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What the law prescribes is the minimum or the higher limit. For example, minimum wages are the minimum; the employer can pay more than that but not less. Working hours are a maximum of 48 in a week; the employer can prescribe a 36-hour week but not more than 48 hours a week. Similarly, under Standing Orders, the age of superannuation can be 60, but the employer can increase it to any extent. The employer cannot do the contrary, i.e., the employer cannot superannuate an employee earlier than 60 years if that is the age of superannuation.
As for ESI, PF, Bonus, Gratuity, etc., the relevant provisions in that act will apply. These two things are separate and need not be mixed with each other.
Vibhakar Ramtirthkar
snehvibha@yahoo.com
From India, Pune
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Dear Vibhakar,
What you say is true for normative legislations; you can go above but not below the stipulated norms. Standing orders are a directive act. It mentions that the age of retirement will be on completion of 58 years, in the absence of any award or agreement.
Such an employee will have to continue his PF membership as there is no retirement age mentioned in the act, and such an employee was a contributing PF member at the time of retirement. He will contribute 12%, and the employer will contribute 3.67% as the employee will cease to be an EPS member on attaining 58 years of age.
Srinath
From India, Mumbai
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What you say is true for normative legislations; you can go above but not below the stipulated norms. Standing orders are a directive act. It mentions that the age of retirement will be on completion of 58 years, in the absence of any award or agreement.
Such an employee will have to continue his PF membership as there is no retirement age mentioned in the act, and such an employee was a contributing PF member at the time of retirement. He will contribute 12%, and the employer will contribute 3.67% as the employee will cease to be an EPS member on attaining 58 years of age.
Srinath
From India, Mumbai
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Dear Shrikant Sir,
An excluded employee, as defined under Paragraph 2(f) of the Employees' Provident Fund Scheme, refers to an employee who, having been a member of the fund, has withdrawn the full amount of accumulation in the fund upon retirement from service after attaining the age of 55 years. If a retired person is appointed and has withdrawn their PF before joining, there is no need to contribute to the PF.
From India, New Delhi
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An excluded employee, as defined under Paragraph 2(f) of the Employees' Provident Fund Scheme, refers to an employee who, having been a member of the fund, has withdrawn the full amount of accumulation in the fund upon retirement from service after attaining the age of 55 years. If a retired person is appointed and has withdrawn their PF before joining, there is no need to contribute to the PF.
From India, New Delhi
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Am aware of the provision. Can an employee withdraw PF on last day of working & join the same org the next day?
From India, Mumbai
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From India, Mumbai
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This practice is well-established in my company. There is no hard and fast rule not to extend an employee's tenure beyond the retirement age. It is wise to settle all the statutory dues like PF/Gratuity, etc., that are due as of May 31, 2017. Appoint him afresh, and he may be paid his salary on a separate paysheet, without deducting PF/ESI, etc. He shall also not be entitled to Gratuity for the extended period. Leave entitlements like EL/SL may also be extended to him.
I am currently 65 years old and still with my company as a Business Associate.
S.N. Bhattacharya
From India, Kolkata
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I am currently 65 years old and still with my company as a Business Associate.
S.N. Bhattacharya
From India, Kolkata
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Dear Shrikant Sir,
In this particular case, the employee is retiring from service after attaining the age of retirement. Consequently, he can withdraw his PF accumulations in the month in which he is retiring. Please peruse the attachment regarding "Settlement of PF & Pension on the day of Retirement."
After retirement and withdrawal of PF accumulations, he becomes an "Excluded Employee" with no bar to take up a job again in the same company or elsewhere.
From India, New Delhi
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In this particular case, the employee is retiring from service after attaining the age of retirement. Consequently, he can withdraw his PF accumulations in the month in which he is retiring. Please peruse the attachment regarding "Settlement of PF & Pension on the day of Retirement."
After retirement and withdrawal of PF accumulations, he becomes an "Excluded Employee" with no bar to take up a job again in the same company or elsewhere.
From India, New Delhi
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Enforcement of negative covenants in employment terms.pdf