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.