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No.You can utilise his services,if he is willing, under any contract on temporary basis.He will get wages as per terms of the contract.After 58 years , his final dues have to be settled.But,on subsequent employment on contract basis,statutory deductions like PF, can be made in a different A/C.
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Normally, companies when rehire the services of a retiring employee, treat him as a Consultant or employee on contract basis. The contract period may vary depending upon the company\'s requirement of his services, his performance/ contribution, health of the employee, etc. Generally, it is on an annual contract basis, renewable at the discretion of the company.
With regard to the advantages of re-employing a retired employee, while there are many advantage as mentioned by the contributing member \'Launchpad\', there is also one glaring disadvantage of not able to bring in newness in the workings /systems.
S. Dass
Dear Mubashira,

While others have responded to your query, let me add my thoughts as well.

The Policy of your Company is that employees must retire at the age of 58 years. However, it is the desire of the Company to re-employ the person after formal retirement takes place.

There is no statutory requirement for retirement, as far as private companies are concerned. You are free to decide either way (re-employ the person or retain the person as a consultant) and also change the age of retirement as is felt appropriate.

My suggestion is the following:

1. Let the retirement take place, followed by the full and final settlement in the normal course.

2. It is preferable (as suggested by several others already) to retain (not re-employ) the person as a consultant. This would provide continuity and benefit of knowledge that the individual brings to the table. I would not suggest that he be re-employed as an employee, since (apart from having to change the policy) this could be cited as a precedent by others who may retire later and seek re-employment. On the other hand a company is free to appoint anyone as a Consultant - it will not be possible to cite this as a precedent.

3. Regarding the allowances that would have been payable to the employee during his employment period (PF, EDLI, Gratuity etc), you could take a Cost to Company approach i.e., gross up all the allowances payable as a part of salary and pay the person the grossed up amount as consultancy fees. This would make sure that while the individual is no worse off financially but also retains the flexibility to invest the surplus funds in instruments of their choice. Since a consultant is not an employee, the benefits like PF / Gratuity etc would not be payable.

I hope this would help you in arriving at an appropriate decision.


Raju Bhatnagar
Dear Fellows,
Retired employees who are re-engaged are called Third Age Employees. If you think taking a third age employee has become necessary in the current circumstance, then consider the employee who has just retired. if he gives consent, then you can re-engage him on contract or part time basis. Note that third age employees are experienced and can push Companies ahead of their competitors.
to all my seniors over here...i just want to ask a question further to this.
What will be the scale of PF,ESI for that said employee who has either joined back as consultant or re joined as a employee.
Will the old scale when he was employed continue in its calculations of PF, ESI
PF , ESI , Gratuity, Bonus need not be applied to consultants as they r have already received under regular employment.
while fixing their consultation fee his last CTC may be considered for fixing monthly fee ie CTC/12 , then his part of PF , Gratuity, Bonus are taken care in monthly fee. The IT for consultants would be 10% + service tax (if the contracts exceeds for more than 6 months).
Dear Members
By reading all your conversations
1.The retired employee cant be enrolled on rolls.
2.As per the company policy he has to retire
3.You can appoint him as a consultant by deducting 10% as a professional fee.
4.He can utilise the company services and he is not eligible for EPF, EDIL
5.As retire employee you can give some facilities like medical,transport
with regards
Siva Sai Gopal.Komma
MosMetro India Pvt Ltd,
Chennai Metro Rail Project
Dear friend
There is no wrong in re-appointment of a retired person on tenure basis or on contract basis. Even Government is also appointing so many Retired senior Officers, even IAS and IPS to various posts in the Government utilizing their services in public interest. Yours is a company established under certain Law and Acts. You can modify your policy taking into account the need of the experts in your company, and re-appoint the experts after retirement in the interest of the company. But they cannot be given regular time scale of pay. They can be accommodated on consolidated salary on temporary basis.
Dear Manpreet Chawla,
Retired Employees can be retained as consultant / or as retainer. There is no hitch in engaging these assets to you organization.
An agreement between your company and the Consultant can be executed under the The Contract Act 1872.
This is safest way to reward good outgoing member, asset.
This will build strong bonding amongst your manpower professionals.
V K Sharma
As per the policy of the Company, the retirement age is 58 years. Every employee of your company shall retire on attaining the age of 58 years as per rules of the Company. If you want to re-appoint any employee after retirement, your company has to take a policy decision to re-employment of such of the employees by paying some honorarium or any consolidated salary depending upon the requirements of the personnel in the company. There may not be any objection. However, you can settle all the retirement benefits to such employees as per your company rules. When once he retired from your company on attaining the age of superannuation, he cannot be appointed as a regular employee again, but if there is need for such person in your company, you can appoint him on contract basis or honorarium bass for a tenure period of one or two years depending upon the situation.
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