Can we continue any employee whose age is above 60?

Dear seniors,

Can we continue employing any individual above the age of 60? If so, what would be the salary breakdown for such an employee, including PF and ESIC contributions?

Please provide guidance on this matter.

Regards,
Mamta Agrawal

Dear Mamta,

If an employee completes their 60 years, they can't be on the payroll, which means there would not be any deductions like PF & ESI. They can work in the company on a contract basis only. For contractual employees, there are no deductions like PF & ESI.

Regards,
Shweta Singh

Employing a person of 60 years of age on the rolls purely depends on the company policy. There is nothing wrong in putting them under the company's rolls if the Standing Orders or other policies do not prohibit such engagement.

If you employ a person over the age of superannuation fixed by the company, it is mandatory that he should be given ESI coverage. Even if you put him under a contractor's payroll, he should be given ESI. For ESI, there is no age bar.

Regarding the coverage of EPF, if he has been in receipt of PF pension or has withdrawn his PF accumulations upon attaining the age of 58, he can be excluded. On the other hand, if he has not been a PF member or has been a Government pensioner and not a pensioner of EPF, then he should be given PF coverage. The only thing is that the employer's share of 8.33%, usually remitted to the Pension fund, need not be done, but instead, the entire 12% of the employer's share should be credited to his provident fund along with his own share of 12%.

The case above will not be different even if he is under the rolls of an outsourced contractor.

Regards,

Madhu.T.K

Dear Sir,

Thank you for your valuable authoritative inputs. Times are changing, and it is quite common to find seniors being hired in more and more companies and in several business sectors to exploit the rich pool of talent coupled with experience. I am sure your inputs would be helpful for the HR fraternity at large.

Warm regards.

Mr. Madhu,

Thanks for your inputs.

I have a query. There is an employee in my company who has been working for the past 14 years. He is 65 years old now. Till now, there was no PF or ESIC in my company. We are just initiating the same. So, what happens to this old employee? Is retirement mandatory? Are we going to face any legal problems for employing people who are well above the retirement age?

Dear Mamata,

What Mr. Madhu T.K. has presented is absolutely correct and valuable. Follow the same because there is no age bar under the provisions of the ESI Act. So far as EPF is concerned, enroll him as it is very good from a social point of view, if not an ex-pension beneficiary.

Regards,
KIRAN KALE

If you have an existing employee aged 65, you should also bring him under ESI and EPF coverage when your establishment gets into ESI and EPF. As stated by me earlier, for the employee of 65 years of age, the establishment's contribution towards the Pension Fund may be diverted to his Provident Fund.

So long as he is fit to do the work assigned, there is no legal hurdle to employ an aged person. But avoid engaging such persons in hazardous occupations and work involving hectic labor.

Regards, Madhu.T.K

Hi there,

I have a thought I would like to share with you guys for employees who have reached retirement age and are valuable assets to the company, i.e., still required to work and are in good health. You can consider the following steps:

• Process their papers as they are going on retirement and pay them all their dues as per the rules and regulations.
• Re-employ the staff on an annual contractual basis, which means they are no longer subjected to pay any pension contribution, and their contract is being renewed annually.
• The employee must undergo mandatory medical evaluation for the renewal of the contract to prove they are fit to work.
• Ensure that the employee has staff to whom they can transfer their knowledge so that when it's time for them to leave for good, the company won't suffer.
• Make sure to add this process to your company policies to avoid any problems with your auditors. You cannot afford to have gaps in your policy.

Regards

Dear,

In both acts, age has no bar to become a member. This means that if the workers cross the age of 58 in P.F., they will still be a member, and both the shares will be deposited in P.F., totaling 12+12 instead of 12+3.67 and 8.33.

Under ESI, the deduction will be the same as for other persons, and there is no age limit.

Thanks,
kkadvocate

Dear,

The pension fund means the amount on which the department did not give interest and provided a pension after the services of 10 continuous years and after the age of 58 (cont. 8.335).

Provident fund means 12% of the worker's contribution and 3.67% of the employer's contribution, on which the department provides interest. Currently, it is at 9.5%.

Thanks,
KK Advocate

Dear Sir,

If the employee crosses the stipulated age mentioned in his appointment letter and if the company is interested in retaining him, then in my opinion, he can be retained on a retainer basis. A separate agreement should be made simultaneously, and his services may be hired on a consultancy basis. Only T.D.S. will be deducted at 10%. No PF or ESI deductions.

If there are any further considerations, please advise.

Employing a person of 60 years of age on the company's payroll purely depends on company policy. There is nothing wrong in including them on the company's rolls if the Standing Orders or any other policy does not prohibit such engagement.

If a person over the superannuation age set by the company is employed, it is mandatory to provide ESI coverage. Even if he is placed under a contractor's payroll, ESI should be provided as there is no age restriction for ESI coverage.

Regarding EPF coverage, if the individual has been receiving PF pension or has withdrawn PF accumulations upon reaching 58 years, exclusion is possible. However, if he has not been a PF member or has been a government pensioner rather than an EPF pensioner, PF coverage should be given. The employer's share of 8.33% typically allocated to the Pension fund need not be provided; instead, the full 12% of the employer's share should be credited to his provident fund along with his own 12% share.

These principles apply even if he is under an outsourced contractor's payroll.

Best regards,
Madhu.T.K

PL SEE THE MATTER HANDLED BY ME IN TH PAST

MD/Approval /16 - 2007

Sub : Retirement Age.

1. Present Status

At present, appointment letter of each employee indicates age of retirement as 58 years.

For employees who were in the union cadre transferred from XXXX, it is 60 years .

Incase of XXXXXXDivision and now XXXXX., the clause reads as under :

“The normal Retirement age is 58 years in the Company. However, subject to your health being satisfactory and level of performance upto the Company's expectation, this can be extended to 60 years at the sole discretion and judgment of the Company.”

2. Legal Background

The Shops and Establishments Act under which our Company is registered with local Authorities do not prescribe retirement age but prescribes punishment for employing a person who is under or over certain age.

Under the said Act, it is prescribed that Industrial Employment (Standing Orders) Act, 1946, is applicable to all establishments registered under Shops and Establishment Act in which 50 or more employees are employed as if they were Industrial Establishments within the meaning of the said Act.

As per the Industrial Employment (Standing Orders) Act, 1946 and Rules issued by the Central Government there under indicate that

The age of retirement or superannuation of an employee shall be as may be agreed upon between the employer and employee under an agreement or as specified in a settlement or award which is binding on both the employee and the employer. Where there is no such agreed age, retirement or superannuation shall be on completion of 60 years of age by the employee.

3. Current scenario

XXXXXwere appointed as consultants after their retirement at the age of 58 years and 60 years respectively.

However, in the program attended by Contract employees in BCCI, it is noted that

a. Continuation of employee as a consultant tantamount to employment with all its liabilities and obligations for the employer.

b. Detailed letter giving attendance requirement, leave, timings and the very fact that they are discharging their duties in the Company's premises is questionable by PF , Shops & Establishment, Service Tax and Income Tax Authorities.

c. No differentiation be made in contract of employment between employees in grades.

4. Suggestions

 Company to amend this clause for all existing employment contracts and include in new appointment contracts which will enable Company to continue services of the employees, if required without going through contractual route.

 It will also not expose the company to any legal liabilities .

Submitted for your approval.

Regards

XXXX

Ps. : Retirement age of Director is governed by the same rules applicable to all employees

i.e. 58 years as of now or 60 years if changed as suggested in the memo.

Dear Shweta,

Greetings for the day.

Yes, if anyone has completed the age of 60 years, they must be on the payroll. As far as PF/ESIC is concerned, the deduction will be as per government norms. In the case of PF, the bifurcation of the challan value, i.e., 25.61%, will be as follows:

- A/c1: 12% of employee salary + 12% of employer salary
- A/c2: 1.1% of EPF salary
- A/c10: Nil, as there is no deduction of pension amount after the completion of 58 years of age, which is 8.33% of EPS salary
- A/c21: 0.5% of EDLI salary
- A/c22: 0.01% of EDLI salary

ESIC deduction will be the same as per norms.

Thanks & regards,

Sumit Kumar Saxena
9899669071, 0120-4131277

There is a difference between Provident Fund and Pension fund. In Pension Fund, only 8.33% of the Employer's Share goes to the Pension Fund, while in the Provident Fund, 12% of the employee's share and 3.67% of the employer's share are added to the Provident Fund. I hope this will clear your concept.

Thanks,

Chandani Shukla
Executive HR, Dainik Jagran

Pension Fund is a part of the Provident Fund. The Pension Fund contribution is 8.33%, which is contributed by the employer into Account Number 10-C. On the other hand, the Provident Fund contribution is 15.67%, with 12% contributed by the employee and 3.67% contributed by the employer into Account Number -1.

Thank you for providing the details.

Dear Chandni,

Greetings for the day.

I agree with your comments, but my concern is only how to manage the EPF procedure for an employee completing the age of 60 years.

Sumit

Dear All,

Generally, PF is deducted at 12% from both the employee and employer sides. Is it compulsory for the employer to pay 12% PF if the employee is receiving a basic salary of more than Rs. 6500/-?

Please suggest at your earliest convenience.

Thank you.

Dear Saxena and Anilvishe,

Ans for your query: The amount deducted for the persons aged above 60 (to be corrected, it should be above 58 as per EPS norms) must be shown separately in form 12A, like VPF, etc. Employer need not contribute over and above 6500 basic as per the EPF norms, but many companies are contributing an equal amount to what employees contribute as a goodwill gesture.

S. Sethupathy Excellent HR Services, Erode.

Dear Anil,

Greetings for the day.

EPF deductions are deducted on basic salary + DA/VDA + food conc. + any other undefined allowances, e.g., special allowance/other allowances, etc. If all the components are less than ₹6500, EPF deduction will be compulsory. If it is more than ₹6500, it will not be compulsory. However, once you become a member of EPFO, it can't be eliminated when your salary/wages increase beyond the limit.

Thanks & regards,

Sumit Kumar Saxena
9899669071, 0120-4131277

Dear Sethupathy,

Greetings for the day.

I agree with your comment, but Rs. 6500/- is the ceiling for EPS/EDLI rather than for EPF. The components considered for EPF deduction should be basic + DA/VDA + food conc + any undefined allowance, e.g., special allowances or other allowances.

Thanks & Regards,

Sumit Kumar Saxena
9899669071, 0120-4131277

We have a situation where we are continuing to employ a few of our employees beyond their age of retirement. We are very keen to continue with our employees if they are willing to work for us and are physically fit for employment. This would be a continuation of service without any break. We would be grateful if you could please advise us whether it is mandatory as per Indian law (PF Law & Labour Law) to deduct Provident Fund after the age of 60 for such employees.

Also, if you could share a link or attachment copy of the law, that would be very helpful.

Regards and thank you,
SACHIN GHAG

Provident Fund Contributions for Employees Over 60

It is not illegal to deduct PF from the salary of a 60-year-old employee. You can also contribute a similar amount to their Provident Fund but not necessarily to the Pension Fund. The earlier principle was that after 58 years of age, you should not contribute to the Pension Fund. However, as per a recent notification, if the employee desires to defer the receipt of their pension, they can do so and require the employer to make contributions until they attain 60 years of age. After 60 years of age, if they are employed, the employer's share of the contribution should go only to the Provident Fund, and the diversion of 8.33% to the Pension Fund should not be made.

Regards, Madhu.T.K

Dear Mr. Madhu.T.K,

Thank you for the clarification on the coverage of employees aged 60 years and above. I would like to seek further clarification on whether we should include an employee above the age of 60 who is already receiving PF Pension. What would be the legal implications if we decide to exempt such an individual from PF coverage? I would greatly appreciate it if you could provide any citations related to this issue.

Thank you.

There will not be any legal issue if you exclude an employee who is already receiving PF pension. You can indeed exclude such an employee. At the same time, if he is a government pensioner and not a PF pensioner, he should be covered, but the employer's contribution should be credited only to his Provident Fund account.

Madhu.T.K

Eligibility for PF Contributions for Employees Above 58/60

Eligibility in such cases depends on the company's policy regarding extending PF to employees above 58/60 or employees who join the company with a PF qualifying salary exceeding Rs 15,000. If the management approves extending coverage, PF can be provided. If the management is willing to contribute to the entire salary, the remittances will be as follows:

PF qualifying salary: Rs 20,000

Employee contribution to PF @ 12% A/C No. 01: Rs 2,400

Employer contribution to Pension Fund @ 8.33% (subject to a wage ceiling of Rs 15,000) A/C No. 10: Rs 1,250

Employer contribution to PF, A/C No. 10 @ 3.67% or the difference between Rs 2,400 and Rs 1,250: Rs 1,150.

Sometimes, the management may cap the salary for contribution at Rs 15,000 in accordance with the mandatory requirement of the PF Act. In such instances, the contributions will be as follows:

PF qualifying salary: Rs 15,000

Employee contribution to PF @ 12% A/C No. 01: Rs 1,800

Employer contribution to Pension Fund @ 8.33% A/C No. 10: Rs 1,250

Employer contribution to PF, A/C No. 10 @ 3.67% or the difference between Rs 1,800 and Rs 1,250: Rs 550.

Regards,
Madhu.T.K

Dear Mr. Madhu T.K.,

Thank you for your reply, which is very useful to me. In fact, we have a few cases like this. Therefore, I can now make a decision to exclude new employees who are 60 and above from both EPF and EPS, even if they are earning less than ₹15,000.

The same Form 19 is to be given for the withdrawal of PF by an employee leaving the establishment upon getting superannuated. Along with it, he has to submit Form 10D for availing monthly pension. The waiting period of 2 months is not applicable in this case.

For an early withdrawal of the Pension Fund before completing 10 years of service, the government's share to the Pension Fund at a rate of 1.16% will not be available to the employee. The withdrawal benefit is determined by a calculation table in this regard.

Madhu.T.K

PF Pension and Employee Coverage

A person drawing a PF pension can be excluded from coverage. There is no need to provide them with any more PF contributions.

At the same time, if your company insists that PF, being an investment, should be given to all employees irrespective of whether they have already withdrawn the PF or not, you can provide it. Since the employee has already withdrawn the PF, there will be no relevance to the UAN. If they are given PF, a fresh member ID will have to be assigned to them. While confirming their previous employment for the purpose of allotting a UAN, you will have to treat it as fresh employment and obtain a new UAN. You cannot continue with the same UAN.

Regards, Madhu.T.K

Dear Mohan,

If your employee has left the organization and cleared his PF dues, then a fresh PF account number shall be generated. However, the UAN number should not be changed. HR department, link your old UAN number with your fresh PF account.

Thanks and regards,
Knjha

Kindly let us know if there is any notification or case available for reference on the following issue.

If the employee joined after reaching the age of 60, are they eligible for PF contributions from both sides?

Seeking clarification from any member of this site.

Thank you.

Dear Seniors,

A worker joined my organization on 13 Dec 2007 at the age of 50 and worked until 31 Oct 2017. Now he is around 60 years old. He was a member of the EPF pension scheme until the age of 58. After that, the pension fund was credited to the EPF share. Please tell me, is he liable for a pension or not?

Thanks & regards.

He should have contributed to EPS only for 8 years, which is 2 years short of pension eligibility service. Hence, he will not receive a monthly pension from EPFO. However, the amount contributed to EPS can be withdrawn along with his Provident Fund accumulations.

Madhu T K

Dear Madhu,

If I do not withdraw my PF at the time of retirement at 60, for how many years after retirement at 60 will PF earn interest?

Can any company hire a 59-year-old employee as a regular employee? If yes, what about PF deduction? He is receiving his pension. Please advise.