Dinesh Divekar
Business Mentor, Consultant And Trainer
Umakanthan53
Labour Law & Hr Consultant
Psdhingra
Legal Analyst, Hrm
Kishorkulkarni
Law Practice
Radha2016
Business Change Consultant Practising In
SAIBHAKTA
Retired From Air India
Mnj.tiwari
Service
+4 Others

Thread Started by #Amit Acharya

Dear Seniors
I would required your advice on the subject mentioned.
We want to keep our employees after 58 years of age also, but after age of 58 years there are few benefits which they will not get.
So we would like to know that Do's & Dont's of the same.
Regards
Amit Acharya
4th June 2016 From India, Mumbai
Dear Amit,
Of course there is legal minimum age limit for employment but no maximum limit. There is no legal compulsion for fixing the age of superannuation at 58. In fact it is a matter left to the discretion of the employer and the employed depending on the nature of job, policy of the establishment, prevailing industry-cum-social practice etc. There are countries like the U.S.A and corporate companies like Sony where no age of retirement is fixed for employees other than the C.E.Os subject to their physical fitness beyond certain age and performance. After 58 years you can not continue the employees in the EPF Scheme. But it does not mean that you can not continue them in employment. Alternatively, you can extend their services beyond the age fixed for retirement and increase their salary proportionately. In the case of higher jobs, such people can be taken back as consultants on retainer basis..
5th June 2016 From India, Salem
Dear Amit,

This is in addition to what Mr Umakanthan has said.

Employment after 58 years depends on the senior employee's physical fitness. More than physical fitness it is because of the expertise that they have acquired in particular field over a period of time. Getting similar person of his/her stature is not so easy. Hence the continuation their employment. The outcome is win-win for both, employer and employee. Therefore, foregoing of few statutory benefits should not be that big cause of worry.

Now coming to the opposite side of the above viewpoint. Why things come to such a pass where you needed to employ a person even after 58 years? Is this not failure of the organisation to groom his successor? Attainment of 58 years of age was a certainty. Management science teaches us to handle unpredictability or uncertainty. Here in your case, why your organisation could not handle even certainty?

Let us not forget that when person none less that Mr NR Narayan Murthy had rejoined Infosys in 2013, there was all-round criticism for Infosys's failure to groom a successor. Media criticised Infosys for not generating a single leader from within though Infosys has world-class Leadership Development Institute in Mysore.

In many organisations there are "Formal Mentoring Programmes" wherein seniors become mentor of the juniors and groom them for higher position. There is a concept of succession planning also. However, generally succession planning is used at the top-most level of the management i.e. grooming of the board member. For employees, it is mentoring programme.

Lastly, I need to give feedback to you on the heading of your post. Employees are "employed" and not "Kept". Therefore, heading of your post should have read "Advice on Employment of Senior Employee after 58 years".

Disclaimer: - Heading of your post asks for advice. Advices do not come standalone all the time. Occasionally these are bundled with criticism. This has been happening since time immemorial. Therefore, no complaints would be accepted for critical evaluation of the incident.

Thanks,

Dinesh Divekar


5th June 2016 From India, Bangalore
Hi
With no disrespect to any comments posted here, I personally don't think age should be a limiting factor to employment. As long as the person is capable of doing his work and the organisation is willing to employ him, the organisation should continue to do so. Some of these employees will have a wealth of knowledge which will be valuable to the organisation. Furthermore, when the employee has dedicated until his 58th year to the organisation, I feel it is a bit harsh to not continue his employment only because he has reached a certain age. In countries outside India this is a Human rights violation under 'Age discrimination'. Time flies. All of us will also reach 58 some year or the other. If we want to continue working and the organisation shows us the door only because we are 58 how would we like it - especially if we are more capable of doing our role than some of the others in the organisation?
Thanks
Radha
6th June 2016 From United Kingdom, London
Dear Radha,

Your comments appear to be out of context. The querist has raised query on the cessation of statutory benefits after 58 years. I have written in my previous reply that if a person is allowed to work after 58 years, then he will lose Provident Fund (PF) benefit. This is as per EPF Act, 1952 hence employers do not have control over it.

More than discrimination, the case is about dependence on persons. When a person works in particular function like HR, Finance, Purchase etc, he/she is bound to possess wealth of knowledge. Nevertheless, this wealth remains with that person. Why organisation was not proactive in transferring this wealth to some another person? Monetary wealth, if concentrated at few hands, stagnates that is why principles of economics teach us. Likewise, it can be concluded that knowledge rots if concentrated in few heads.

Knowledge Management: - The very theory of knowledge management has taken birth to reduce the dependence on few people. This dependence arises when organisation fails to convert tacit knowledge to explicit knowledge. It is well proven how organisations pay hefty price for depending on the persons, whether they are young or old!

Organisation's culture: - Occasionally there is downside of employing persons who continue to work well past their retirement age. They fail to connect with the younger generation. Let us not forget that about 35% of India's population is below 30 years to age. Their failure to sync with a generation below creates a problem on the culture of the organisation. For a while, suppose this is also not a problem. The one more problem is their dogmatic views, lack of technical savviness in day to day life etc. Sometimes these people profess and that too with pride how they are not technically savvy. Suppose this also is not a problem but then the last problem arises when these old people start brandishing their length of service to silence the voice of the juniors. I know a Managing Director (MD) of public limited company who is surrounded by persons who are with him for the last 25-30 years. Their prolonged association with MD is hampering organisation's growth because many times these codgers use their long association with the MD as a weapon to scare newcomers!

If we allow the old people to continue to work, then when will young generation will get chance to work? Retirement age of 58 or 60 years is a threshold that is used world over and there is nothing new about it. However, that does not mean that we should consider someone's 58th year birthday as expiry date. Their services can very well be used as consultant.

My personal experience: - If 1947 is major cut-off point in the history of India then second cut-off point could be 1991. In this year the then Prime Minister PV Narasimha Rao launched economic reforms. The real effects of reforms were observed after 15 years. However, I had chance to work under one Vice President (VP) who even after 15 years of the economic reforms also, behaved as if erstwhile socialist era still continued. Economic reforms had redefined the job market. He did not have even inch of knowledge of these changes and neither he bothered to acquire it. Notwithstanding his few good qualities, he became the cause of employee attrition. It took couple of years for management to understand the cause of employee attrition.

Final comments: - Excessive dependence on few persons will always have negative repercussions. Our magnates are known to keep themselves surrounded by persons of their caste, or relatives. Little do they realise that this inhibits their growth. In contrast, our current Prime Minister has taken a tough stand and did not include anyone in his council of ministers who are above 80. For this, he has invited wrath from the oldies from his party and occasionally they rant against him. Nevertheless, this is a major shift in political era. Look at the other political parties. We had Chief Ministerial aspirants who were about to become 80 or 90! Few of them were fragile, in-feeble and wheel-chair bound also but lure of power so strong that hardly they bothered about their physical infirmities. Retirement is a new era in everyone's life. It has to begin some time! One cannot scream for discrimination when told to retire after 58 or 60 years.

Thanks,

Dinesh Divekar
6th June 2016 From India, Bangalore
I not only endorse but also appreciate views of Shri Dinesh Divekar. However, in place substitution of the terms, "keep" or "employment" the term should be re-employment of a person after superannuation.
6th June 2016 From India, Delhi
Dear Radha,

There is nothing wrong in re-employment of any retired person by virtue of his talent. But, in most cases only touts or sycophants or back-biters, NOT good workers, are tried to be be retained even after their superannuation for the purpose of support to upper management against other employees. But the employees of real worth never try to be retained further, as they know that they can be successful wherever they go after leaving the organisation. Even in my case, I was offered continuous extention of 2 years on my superannuation by an honest chief engineer, but I principly thought that wrong and unethical to become hurdle in promotion of someone else deserving to hold the post. So, I politely rejected his offer, saying that I would prefer to become a free flier bird, not a captive employee.

However, if the management thinks, the services of some retired employee is important for the organization to keep him by retention of his service on re-employment, the management can hire his services as consultant for some specific period, not for work, but to train other employees, so that the management may not feel the dearth of talent at any point of time in future.

Moreover, re-employment of the superannuated employees tends to escalate unemployment and also denial of opportunity to the youth, who can also prove assets to the company depending upon variety of merits from individual to individual.
6th June 2016 From India, Delhi
Dear Dinesh,

Yours is a very good detailed mail. I have noted the point on EPF Act which is informative.

When it comes to dependence - it really depends on the role the person is playing. As you rightly say if it is HR, Finance, Purchase etc. we can get that knowledge transferred. However if it is in some other highly skilled areas, it may not be that easy to transfer - especially when dealing with some crisis. We should however actively recruit freshers and train them to support and eventually replace other roles; where possible.

Regarding synchronising between generations, I think it best works when they all work harmoniously together rather than separate them. Separating age groups may not really solve the problems. I am however unsure of the lack of technical savviness point you are making. It seems to be more about the individuals concerned rather than all the people over 50yrs. All 5 fingers in our hand are different.

Except for some countries, there is no statutory retirement age for 'working'. The statutory age only applies to drawing out the benefits.

On the point of being surounded by relatives - I think that is more of a 'conflict of interest' and several organisations have strict policies not to encourage the same.

While some may not agree, I still believe that a person should move on if he is not capable of performing the role rather than reaching a certain age.

Thanks

Radha
6th June 2016 From United Kingdom, London
Dear PS Dhingra,
Nice to know that you agree re-employment of talented persons. I am not sure why someone would want to have unprofessional people in the organisatoin; but I am sure you have come across this situation and hence you have posted here. It is really unfortunate if hte management support this culture.
Good employees do not need to cling on to the position - but if they want to and the organisation also wants to keep them - then I don't believe it is unethical; as the same rule goes to new comers as well. If they are good they can also find any place to work. Well you did a noble act by moving on giving room to other employees.
Thanks,
Radha
6th June 2016 From United Kingdom, London
Dear Amit,
In addition to what two learned members of our forum have said I feel there is nothing wrong in retaining employees over 58yrs age if they are medically fit and willing.In fact life's expectancy has increased by several years since independence but many organisations ,including central/state PSUs , are still adhering to the 'British Raj'age of retirement of 58yrs.Secondly, in companies where such people are employed it is normally done on contractual basis and contract is renewed eyery one/two/three years depending on the organisation's need and employee's performance.
6th June 2016 From India, New Delhi
There is no bar of engaging the employees over and above age of 58 years. Certainly their experience is helpful to the management at all times. They will be generally engaged on contract basis/temporarily. Removable from service at any time.
Regarding Dos and Don'ts:-
You can deduct PF contributions and to pay in No.1 EPF a/c only. It is only option to the management but not compulsory.
You can deduct ESI on par with others, if his salary is below Rs.15000/-.
Leaves, Personal Insurance if any benefits to be continued or not as per the policy of management.
7th June 2016 From India, Hyderabad
Dear Radha,
Normally talented executives don't want to stick to their old positions. My belief is, if he is a talented person and wants to cling to that position even after superannuation, he can only be lacking in self confidence that he cannot survive after retirement or cannot establish himself/herself in a more ucrative position at his own. That way, he cannot be treated as a talented person.
About concern of the management, I think Shri Dinesh Divekar has very well elaborated on that point, or otherwise, possibly, some boss can be understood to be interested more on keeping his touts and sycophants around him, rather than a talented person.
7th June 2016 From India, Delhi
Dear Amit,

I am fully agree and endorsing point of view of Mr. Divekar, even you may be able to recollect whenever succession planning fails in past or current, there are major losses who failed to plan or execute it in the manner it is desired. I would like to quote two examples here one for ancient era where Bhishma fail to the succession planning and you are aware of the results. In todays scenario our current prime minister brought government first ordinance to deploy Mr. N. Mishra, now the result you be able to evaluate.

An old saying is if you "fail to plan it means you are planning to fail", it is very simple as per practice if you are aware that you need to replace the person soon after attaining the age of 58, and you fail to provide a competent replacement to the organization, the reasons are too much if we look into it. Now the question is how to deal with it.

I am not at all against employing old associates, loyal, competent, versatile, you may continue their services as a consultant, advisor or kind of role, as ultimately organization shouldn't suffer.
7th June 2016 From India, Gurgaon
Dear All,
Thanks for sharing your considerable view and thoughts on subject.
Discussion remain fruitful.
Regarding EPF - Please note that EPF member remain EPF member even after attaining age of 58 years if his employment remain continue. Only EPS (pension) is discontinued. Either, he can withdraw his Pension share if service is less than 10 years, or he can apply for pension if his service is 10 or more years.
With regards,
Talwinder Singh
7th June 2016 From India, Chandigarh
A few points which I wish to add in the discussion...

1. Epf act doesnot restrict PF to age of 58 years or for any age. Member can continue his PF contribution as long as he is in service. Only little change takes place on reaching 58 is that his employer's contribution starts going to PF Account instead of going to pension account. Before 58 it used to go to Pension Account. So after 58, no any benefits reduced.

2. Reaching a certain age, is a very natural process and hence stopping at one point is necessary. Countries have difderent age of retirements and even different age of retirement given to different classes. For Industrial working class, age has been set to 60 years. Model Standing Orders under the Insustrial Employment Standing Orders do prescribe age of superannuation to 60 years.

3. If people do not retire then how young people will get emploment? So there is nothing sentimental or harsh when one is retired from service on reaching a certain age. But, I wonder reference to human rights on the point of age discrimination comes into play ? The concept of age discrimination is totally different than what is referred to in the post. Perhaps, in future, continuing a senior employee may be regarded as a "cruelty to senior citizens".

4. The concept of "Four Ashrams" which includes "Wanprasthashram" has been given its place. If a person starts job at say- 18 years of his age, then on reaching 58 will mean that, he worked for 40 years. That was the limit of Gratuity (20 years salary) earlier. Now also this limit is to be read with Rs. 10 lacs whichever is higher.

5. I hope I have explained sufficiently the background thought of concept of Superannuation.
7th June 2016 From India, Kolhapur
Dear Sirs,
Regarding EPF, there is no age bar. As long as the employees are in service beyond 58 years of age, EPF is statutory.
• However, under EPS 1995, an employee shall cease to be the member of Pension Fund from the date of attaining 58 years of age or from the date of vesting admissible benefits under the Scheme, whichever is earlier. Therefore, pension contribution has to be stopped on the day of attaining 58 years.
• Contribution to the pension fund (8.33%) will be diverted to the Provident Fund (whole of 24% i.e. 12% + 12 %) and the pension fund account will be closed. While generating the PF challan, in Account No. 10, deduction of no. of subscribers who have attained 58 years of age shall be made.
I may be enlightened on the correctness of the above provisions.
High regards,
Libin MP
8th June 2016 From India, undefined
Dear Amit,
Everyone has rightly said and no one is against the retaining employees, the issues arises as why you or your organization want to retain them, Is there lack of succession planning, is there lack of skills in available manpower, or if it is its not good sign for a health organization.
8th June 2016 From India, Gurgaon
Dear Mr Kulkarni ,
Thanks for the excellent write up and justification for retirement and 'Wanprasthashram' advice post 58 yrs. But then most of our politicians should have been on the mountains or in deep woods observing penance ! If they can continue past practically any age ( 93 yrs old Achutanandan in Kerala was ready to become CM) then is it not too much to expect an "aam aadmi" to accept retirement at, not old , but middle age of 58yrs ?
8th June 2016 From India, New Delhi
Dear Sai Bhakta,
I would like to correct you, as in British Raj, age of retirement was only 55 years, not 58 years.
After 15 years of independence, It was the Government of India, which raised the retirement age of Government Employees from 55 to 58 in the year 1962. Age of retire,ent was raised from 58 years to 60 years in the year 1998.
9th June 2016 From India, Delhi
Dear Mr Dhingra ,
The retirement age for government employees was raised to 60yrs in 1998.Many central PSUs followed sue but in a year or two many of them rolled back their retirement age to 58yrs.Even in cases where 58yrs was the retirement age the management reserved the right to retire an employee any time after he/she attained 55yrs age.Ofcourse the employee too had the freedom to ask for retirement.So the British legacy was very much there just like it was for several years in our Budget presentation in parliament at 4.30p.m.which was 11 a.m.in London and convinient for the 'Masters'.
9th June 2016 From India, New Delhi
Dear Sai Bhakta
I wonder if your present reply has any relevance to the present issue. The issue was about retention of an employee beyond retirement age of 58 years, while your reply is on the right of the employer to retire the employee at the age 55, as a legancy of British Raj.
So far as British Raj Legacy is concerned, it is not only in service laws, but also persists in almost every law of the land where even the laws of pre-independence are affecting all sphers of lives of the Indians.
10th June 2016 From India, Delhi
Hello Sirs,

I am making this reference on behalf of my colleague who has recently attained 58 years of age. Upon his attainment of 58 years, no contribution towards Provident Fund as well as Family Pension Fund is made by his employer. However, he continues in service beyond 58 years of age.

I understand, under EPS 1995, an employee shall cease to be the member of Pension Fund from the date of attaining 58 years of age. However, there is no age restriction for the contribution of Provident Fund and as long as the employee engaged in service, he can contribute to Provident Fund and the employer is also bound to contribute 12% of Provident Fund. Therefore, pension contribution alone has to be stopped on the day of attaining 58 years. Contribution to the pension fund (8.33%) will be diverted to the Provident Fund (whole of 24% i.e. 12% + 12 %) and the pension fund account will be closed.

Regarding drawal of Family Pension, he has been advised to submit the application only after his discharge from the employment i.e. he cannot draw the pension as long as he is employed notwithstanding the fact that he has already ceased to be a member of Pension Fund on attaining 58 years of age. I would like to know the correctness of this statement.



With high regards,

Libin MP
20th June 2016 From India, undefined
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