Can a 58-Year-Old Join a Company and Still Get Benefits Like PF and Gratuity?

Dear All Seniors, Please let me know whether a person aged 58 years (completed 58 years) can join a company and receive Rs. 15,000 as gross salary. If the company's fixed retirement age is 58 years, is he eligible for Provident Fund, Pension Fund, and E.D.L.I.?

Eligibility for Benefits

Is he eligible for a bonus? Is he eligible for E.S.I.? Is he eligible for Gratuity?

Compliance with the Factory Act

If the company does not provide any benefits to employees such as PF, ESI, bonus, or gratuity, would it be against the Factory Act?

Thanks & Regards, Mohan

If you do not pay him the above benefits, it will not be against the Factories Act. The above benefits are governed by other Acts like the EPF (MP) Act 1952, POB Act 1965, ESI Act 1948, and POG Act 1972. Except for the pension scheme, he is eligible for all benefits.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Retirement Age and Employment Status

The age of retirement/superannuation of an employee is specified either in the terms of the contract or by the Industrial Employment and Standing Orders Act. The Factories Act has nothing to do with it. However, the employee pension scheme does not allow a 58-year-old person to become its member.

You need to define whether the person is an employee or on retainership and decide accordingly.

Thanks,

Regards,
Mritunjay Nath Sahu
GM(HR)

Dear Mr. MN Sahu Ji, The employee is retired from government service and is receiving a pension. In my view, he is eligible for all benefits under the following acts:

- For PF under E.P.F. Act, 1952
- For Bonus under Payment of Bonus Act, 1965
- For E.S.I. under E.S.I. Act, 1948
- For Gratuity under Payment of Gratuity Act, 1972.

If I am wrong, please correct me.

Dear Mohan, I fail to understand how any person can be allowed to join your organization when the superannuation age is 58 years. However, since you say he has joined your organization, there must be something mentioned in his offer letter regarding the appointment duration. Depending on that, the benefits as detailed by you will be payable as per the relevant Act/Rules/Scheme that govern them. In some cases, it has been observed that the PF amount and account are transferred to a later organization without final withdrawal. In such cases, the PF account number remains unchanged, and the contributions are credited to that account. The withdrawal takes place after the employee concerned relinquishes their position or ceases employment.

Best wishes,

AK Jain
HR Personnel
NCL, CIL

Dear Mohan,

When an employee completes 58 years, he/she ceases to be an employee if the HR manual of the company states the retirement age is 58 years. Therefore, no benefits accrue to the employee on the day he attains 58 years.

Sreedharan PV

Concerns About Employment Beyond Retirement Age

The applicability of various benefits, except for the pension scheme, has already been submitted by many members, and I do not wish to go into it again. I wanted to point out that when the company has fixed 58 years as the retirement age, how was this person employed? The company has created a very bad precedent and a possible problem for the future—any employee reaching 58 years in the future can cite this and request continuation of employment.

Additionally, the company has demonstrated that its rules and policies are only for records and not for implementation and following. Can this organization now expect its employees to respect its rules and policies?

Please let me know if you need any further assistance.

First point that you have to be aware of is that there is no bar on employing people who have crossed the retirement age, which is giving them a status of "re-employed pensioner." Such persons are generally to be paid a consolidated amount only based on the decision of the management. Usually, companies pay a fee to cover travel costs, lunch costs, etc., and charge the same as "Payment to Professional services" or "payment to consultants." This way, the money paid cannot be termed as salary, and only income tax is to be deducted at source. Employing specialists cannot be avoided, especially when a person carries special knowledge.

If the person is drawing a pension from the Central Government, he is said to be drawing the same from the consolidated fund of India. When such a person is employed by any agency which meets its expenses out of the same fund, i.e., the consolidated fund of India, then some restrictions and limitations apply (like restriction on payment of double dearness allowance, etc.). All Central Government Departments come under this clause (but not the PSUs).

Being a private organization, you don't have much to worry about and are bound only by the constitution of your company and have to generally play within the company act. It is advisable that the person's "appointment letter" be worded properly to deprive him of an employee status but give him a consultant/SME status. This will automatically avoid all your problems of PF, ESI, etc., and make it clear for you.

Hope this clarifies.

I have a few questions:

1. If the employee continues working after the retirement age of 58, should the employer show them as Retired and then as a new joiner? Or

2. Can the employee continue working without any break for a few more years, as per a letter to be issued by the employer?

3. If the employee is shown as Retired, does their present PF account continue for further deposits, or do they have to withdraw their PF and open a fresh PF account?

I am not against employing a person above 58 years, as you seem to have understood. Many times, most organizations continue with people beyond 58, usually due to the expertise they have gained over the years, the need for work as you mention, and it becoming the norm with galloping inflation, or simply due to the lack of available personnel to take over from the retiring person. The usual practice is to hire people beyond 58 on a retainer basis and deduct TDS from such retainer fees without any statutory applicability like PF, ESIS, Gratuity, etc.

Rules and Policies

The point I made was that rules and policies should be made for following and not for the sake of making them, and that the organization itself then breaks them, giving a wrong message to everyone.

I take this opportunity to wish you all the best and sincerely hope you get a good job that utilizes your capabilities as well as meets your economic necessities plus some savings.

Regards.

Most interpretations are correct. In some cases, individuals are appointed as "RETAINERS." Except for the PF Pension, all other elements are to be treated as usual. However, this is purely dependent upon management policy. A model Retainer Appointment Letter is attached for your information (it may be changed as needed).

Regards,
PBS KUMAR

Employee Pension Scheme 1995 (EPS)

Employee Pension Scheme 1995 (EPS) is the third retirement benefit, which is contributory. This came into force in 1995, replacing the Employee Family Pension Scheme 1971 (assured benefit). The purpose of the scheme is to secure financial assistance to an employee after his superannuation/retirement, which is generally at the age of 58 years. It means the benefit of EPS starts after the age of 58 years. The minimum qualifying years for a pension is 10 years in case of survival. If an employee becomes a member at 58 years, the purpose of the Employee Pension Scheme 1995 gets defeated. Therefore, as per section 2(ix) of EPS, an employee attaining the age of 58 years ceases to be a member of the scheme.

Thanks,

Regards,
Mritunjay Nath Sahu
GM(HR)

Hi,

In our company, some employees have joined after the age of 58, and contributions have been paid towards EPF and EPS. Now, they are applying for EPF withdrawals. In order to withdraw their full contributions like EPF and EPS, what should they do?

Thank you.