Hiring Senior Citizens: What Are the Consequences and Procedures to Follow?

Please guide me on the consequences of hiring a senior citizen under the company's employment. If the answer is no, what are the procedures to follow?

Regards,
Prachi

You are allowed to hire any senior citizen (above 58 years). It can be done in two ways - on payroll or off payroll.

On Payroll

If you wish to hire such a person on payroll, then you can hire them as a normal employee with all social security benefits (PF, ESIC, bonus, gratuity, etc.), but there is no need to pay pension contributions. The same amount can be deposited into the PF account.

Off Roll

To avoid any liability towards social security benefits, you may take them on a contract by creating a service contract and can pay their fees by asking them to raise an invoice or bill on a monthly basis.

As suggested by you, the person can be taken on a retainer agreement. However, in this case, TDS at 10% will be applicable. You can place such employees on the payroll. No PF terms will be applicable as they are exempted employees. The only deductions will be Provident Fund and Income Tax as per the case.

Regards,
Ramakant

There is no upper age limit to employ a person; legally, there is also no bar. However, as explained by others, he is not eligible to continue his EPS Pension account. So, it's open to you either to take him on regular payroll or appoint him as a contract employee or as a consultant with terms and conditions to suit your policies. Depending on this, you may decide to pay him through a monthly salary bill or by crediting directly to his bank account as per your convenience. TDS would depend on his status of employment.

Regards.

You have mentioned that only deductions will be Provident Fund and Income Tax as per the case. I think you had earlier stated that PF is not applicable. This depends on the willingness of the management. Instead of EPF, the retired incumbent, by whatever designation called, may be allowed PF benefit for crediting the PF amount recovered from the employee along with the employer's contribution in PUBLIC PROVIDENT FUND (PPF) with banks or post offices.

Of course, he may not be eligible for the benefits of EPF and ESI. Instead, he can be given free mediclaim policies or medical reimbursements both during service and thereafter, as a good employer would generally like his present and ex-employees to have a peaceful life.

If he is not paid properly, it amounts to exploitation of seniors. In fact, senior citizens will contribute more than many other persons, though not all. They will deliver results with good and valuable suggestions/advice. Private firms owned by Jains and Chettiar communities prefer mostly senior people for their continued service, knowledge, experience, and honesty. CTC in respect of senior citizens should also be calculated, and they should be placed on par with other employees, of course, based on their ability, devotion, duty, etc., without considering age, which is only a number.

Regards