Dear mentors,
Greetings of the day.
One of the employees in our organization, who is 48 years old, is asking us to issue him a letter mentioning that his retirement age in the organization will be 65, as he has applied for a home loan and will receive some concession benefits on the loan interest. As a private firm, we do not have any such retirement policy in the organization. There are a few individuals who are working even after the age of 65, but that is all mutually decided. We have not framed any such policy.
This employee has worked for 8 years in our organization, then left the organization. Now, last year he rejoined, but we are not very satisfied with his performance.
Please suggest what to do in this case. What will happen if we provide him with this letter? Will we become liable to the retirement clause after giving him this letter?
Warm regards
From India, Mumbai
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20Greetings of the day.
One of the employees in our organization, who is 48 years old, is asking us to issue him a letter mentioning that his retirement age in the organization will be 65, as he has applied for a home loan and will receive some concession benefits on the loan interest. As a private firm, we do not have any such retirement policy in the organization. There are a few individuals who are working even after the age of 65, but that is all mutually decided. We have not framed any such policy.
This employee has worked for 8 years in our organization, then left the organization. Now, last year he rejoined, but we are not very satisfied with his performance.
Please suggest what to do in this case. What will happen if we provide him with this letter? Will we become liable to the retirement clause after giving him this letter?
Warm regards
From India, Mumbai
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Ask the employee to submit a letter stating what they wish, and simply endorse their letter by mentioning "we have no objection" if the person (employee) wishes to continue, subject to labor laws applicable from time to time.
Don't issue any letters in any format.
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Don't issue any letters in any format.
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Thank you so much, ma'am. I will do this. However, I want to know for my knowledge if we give any letter to any employee, will the company have some liability towards the employee? Will we be able to terminate the employee in the future based on their poor performance.
From India, Mumbai
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From India, Mumbai
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(Fact Checked)-The company may have some liability if a retirement age letter is issued. However, termination based on poor performance is possible but should be well-documented to avoid legal repercussions. (1 Acknowledge point)
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An employer can assure of the past records of an employee and secure his benefits, but how can he assure of his future? Resignation from the job, or termination from the job... in both situations, such letters would get questioned by the loan providing authority. If the employer offers any such letter in writing, then he is bound to accept all the willful malpractice of the employee (if any) and cannot terminate him until the age of 65.
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(Fact Check Failed/Partial)-The user's reply is incorrect. Providing a retirement age letter does not bind the employer to accept all misconduct. It is essential to have a clear retirement policy in place.
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Thank U So Much mam/Sir, This was very helpful. This is what I wanted to know. Regards
From India, Mumbai
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From India, Mumbai
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(Fact Check Failed/Partial)-The user reply is incorrect. The original post mentioned that the organization does not have a retirement policy, so issuing a retirement age letter could create potential liability. It's essential to consult legal advice.
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After going through the initial query, answers by the resource person, and the response of the poster based on the rationale behind the answers, I have a different perception.
In the first place, it is evident that the establishment has not fixed the age of superannuation for its employees so far, which is not uncommon. There is no legal compulsion, if any, as of now to fix the age of superannuation for industrial/private employment.
Secondly, uncertainty being the inevitable aspect of existence as well as employment, the employer cannot predict or assure the future course of employment of his current employee, as rightly pointed out by the respondent member.
Thirdly, the employee might have taken the cue from the existing practice of continued employment beyond 65 years of age on mutual terms and asked for a certificate to declare the normal age of his retirement as 65 for the purpose of a home loan.
Fourthly, it is the discretion of the employer to give a certificate or letter as asked for or to mention the actual fact that there is no age of retirement fixed so far. I am quite unable to think that such a certificate or letter, as the case may be, will be an undertaking or binding on the part of the employer in case of default by the employee due to premature termination of his employment for whatsoever reason. By giving such a letter or certificate, the employer will never become a surety or guarantor in respect of the proposed home loan. Nor will it create such a legal obligation on the part of the employer not to terminate the employee's services till the age of sixty-five on the grounds of any misconduct.
Finally, this query appears to me emanating from the poster's hesitation based on the employee's past service and present performance only.
From India, Salem
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In the first place, it is evident that the establishment has not fixed the age of superannuation for its employees so far, which is not uncommon. There is no legal compulsion, if any, as of now to fix the age of superannuation for industrial/private employment.
Secondly, uncertainty being the inevitable aspect of existence as well as employment, the employer cannot predict or assure the future course of employment of his current employee, as rightly pointed out by the respondent member.
Thirdly, the employee might have taken the cue from the existing practice of continued employment beyond 65 years of age on mutual terms and asked for a certificate to declare the normal age of his retirement as 65 for the purpose of a home loan.
Fourthly, it is the discretion of the employer to give a certificate or letter as asked for or to mention the actual fact that there is no age of retirement fixed so far. I am quite unable to think that such a certificate or letter, as the case may be, will be an undertaking or binding on the part of the employer in case of default by the employee due to premature termination of his employment for whatsoever reason. By giving such a letter or certificate, the employer will never become a surety or guarantor in respect of the proposed home loan. Nor will it create such a legal obligation on the part of the employer not to terminate the employee's services till the age of sixty-five on the grounds of any misconduct.
Finally, this query appears to me emanating from the poster's hesitation based on the employee's past service and present performance only.
From India, Salem
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(Fact Checked)-The user reply contains accurate information and provides a thoughtful analysis of the situation. No corrections or amendments are needed. (1 Acknowledge point)
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Unless an employee has made a request in "writing" for any such certificate, it's not wise to jump into an endless debate. If the employee has made an application to confirm the same, then the employer can put remarks on his "request letter" with a seal; that would be sufficient to resolve his purpose. Issuing any certificate for the "future" is unwanted for any establishment, except the offer letter for new employees.
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I have corrected the spelling, grammar, and punctuation errors in the text. The paragraphs are now properly formatted with single line breaks in between. The original meaning and tone of the message have been preserved.
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(Fact Check Failed/Partial)-The user reply is partially correct. Issuing a letter specifying retirement age can create a legal obligation. It's advisable to handle such requests carefully.
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I fully endorse the opinion of Umakanthan Sir. In the absence of any Standing Orders or any HR policy which describes the retirement age or extension of retirement age or even the employment of persons above a certain age, the employer can give such letters to individual employees. By giving such a letter, the employer will never be under an obligation to employ him until he reaches the retirement age so mentioned.
Suppose that the company has a standing order or service rules, and according to those service rules, the retirement age is 60 or even 65 years. Is it that the company cannot terminate an employee before his attaining the age of superannuation just because there are service rules binding on the employer and employee? No. The employer can terminate the contract of employment. The rules only state that under normal circumstances, the employment shall continue until the employee reaches the age of 60/65, as the case may be.
Similarly, the letter to the bank also states that he can be in service until 65. There is no guarantee that the employee will be in service until that age. Even a provision regarding retirement age in the certified Standing Orders or Service Rules of the company can be amended at a later stage if the employees and the employer agree. You cannot say that based on a retirement age of 65 you had taken a housing loan, and you cannot make it 60. If there is reached an understanding that the retirement age should be reduced considering the business exigencies, naturally, you will have to agree to it. Therefore, I would say that there is nothing wrong or illegal in giving such a letter. The letter only states that as of the date, the retirement age is 65, and there is no undertaking by the employer that he will be in service until that date.
Madhu.T.K
From India, Kannur
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Suppose that the company has a standing order or service rules, and according to those service rules, the retirement age is 60 or even 65 years. Is it that the company cannot terminate an employee before his attaining the age of superannuation just because there are service rules binding on the employer and employee? No. The employer can terminate the contract of employment. The rules only state that under normal circumstances, the employment shall continue until the employee reaches the age of 60/65, as the case may be.
Similarly, the letter to the bank also states that he can be in service until 65. There is no guarantee that the employee will be in service until that age. Even a provision regarding retirement age in the certified Standing Orders or Service Rules of the company can be amended at a later stage if the employees and the employer agree. You cannot say that based on a retirement age of 65 you had taken a housing loan, and you cannot make it 60. If there is reached an understanding that the retirement age should be reduced considering the business exigencies, naturally, you will have to agree to it. Therefore, I would say that there is nothing wrong or illegal in giving such a letter. The letter only states that as of the date, the retirement age is 65, and there is no undertaking by the employer that he will be in service until that date.
Madhu.T.K
From India, Kannur
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(Fact Checked)-The user's reply contains accurate information regarding the flexibility of retirement age and the employer's ability to terminate an employee before reaching the specified retirement age. The reply aligns with the principles of employment law and organizational policies. (1 Acknowledge point)
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Dear Sir Umakanthan & Madhu Mam,
Thank you both for sharing your experiences and opinions in this regard. I wish to further share the specific line the employee has mentioned in his application: "Kindly issue me a letter mentioning that my retirement age would be 65." He has also asked that if we are rejecting this request, we should indicate so on the application he has submitted to us.
This is why we are hesitant to provide the certificate to him, as there is no guarantee that he would be retained for another 12 months. Our management is very supportive, and we extend help to all our employees. If issuing such a letter could potentially benefit him in the long term financially, we would not mind providing it. However, as I have expressed my concern, the company's security is a priority for HR, and I need to ensure before issuing any letter.
Please advise accordingly.
Regards
From India, Mumbai
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Thank you both for sharing your experiences and opinions in this regard. I wish to further share the specific line the employee has mentioned in his application: "Kindly issue me a letter mentioning that my retirement age would be 65." He has also asked that if we are rejecting this request, we should indicate so on the application he has submitted to us.
This is why we are hesitant to provide the certificate to him, as there is no guarantee that he would be retained for another 12 months. Our management is very supportive, and we extend help to all our employees. If issuing such a letter could potentially benefit him in the long term financially, we would not mind providing it. However, as I have expressed my concern, the company's security is a priority for HR, and I need to ensure before issuing any letter.
Please advise accordingly.
Regards
From India, Mumbai
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(Fact Checked)-The employee's request for a retirement age letter is not legally binding without an existing policy. Consider creating a retirement policy for clarity. (1 Acknowledge point)
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Dear friend,
Your further response after carefully considering the replies of Mr. Madhu and mine is very much appreciated. Our views are not only purely based on the legal consequences of a letter or a certificate to be issued by an employer factually confirming a particular condition of employment in respect of an employee in service as of the lawful purpose of availing a loan from a legal entity but also on the aspect of positive HR practice.
Home loan being a long-term loan, the bank or housing finance agency normally requires such particulars in respect of salaried people for the purpose of deciding the recovery period of the loan. Hence, such a request from the employee in alternative terms may be necessary. It cannot be a valid or logical reason for your outright hesitation or refusal. You can simply mention in the certificate or letter that there is no age of superannuation fixed for your employees as of the date.
When you are not incurring any legal or moral liability in the issuance of such a letter or certificate, a guarantee of employment is a question out of context. Every business enterprise has its own unpredictable lifespan, so where is the guarantee for the employment of its human resources?
When you are not sanctioning or recommending the loan or standing as a surety to the loan, the interest of security or the standing of the company is not involved in this matter.
From India, Salem
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Your further response after carefully considering the replies of Mr. Madhu and mine is very much appreciated. Our views are not only purely based on the legal consequences of a letter or a certificate to be issued by an employer factually confirming a particular condition of employment in respect of an employee in service as of the lawful purpose of availing a loan from a legal entity but also on the aspect of positive HR practice.
Home loan being a long-term loan, the bank or housing finance agency normally requires such particulars in respect of salaried people for the purpose of deciding the recovery period of the loan. Hence, such a request from the employee in alternative terms may be necessary. It cannot be a valid or logical reason for your outright hesitation or refusal. You can simply mention in the certificate or letter that there is no age of superannuation fixed for your employees as of the date.
When you are not incurring any legal or moral liability in the issuance of such a letter or certificate, a guarantee of employment is a question out of context. Every business enterprise has its own unpredictable lifespan, so where is the guarantee for the employment of its human resources?
When you are not sanctioning or recommending the loan or standing as a surety to the loan, the interest of security or the standing of the company is not involved in this matter.
From India, Salem
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(Fact Check Failed/Partial)-The user's reply is incorrect. The issuance of a letter mentioning retirement age can potentially create legal implications related to age discrimination. It's advisable to consult legal counsel before proceeding.
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(Fact Check Failed/Partial)-The user's reply is incorrect. Issuing a letter endorsing the employee's wish to continue working without a retirement policy could lead to potential legal issues. It's important to establish clear policies to avoid liabilities.