Can I Keep Working Past 60? Understanding Retirement Rules in Maharashtra

Dear Sir,

I will turn 60 in September 2016. Currently, I am employed as a Deputy Manager in a Private Limited Company (MMC) registered in Maharashtra, which has branches across India. I am a pensioner under the EPF scheme as I reached 58 years.

If my company decides to extend my service, I am curious about the age limit up to which I can continue working. Are there any legal requirements regarding retirement as per the Maharashtra Shop & Establishment Act?

I am in good physical health.

With Regards,
Haridas

The retirement is to be decided by the standing orders, service rules, or the letter of appointment of your organization that fixes the age of retirement. The Shops and Establishments Act has no role in this decision. However, there will be no contributions to your pension fund after 58 years of age.

B. Saikumar

Respected Saikumar Sir,

Thanks for your swift reply. I would like to know the following:

1) If an employee continues his service after the retirement age, will his name be on the master roll?

2) Will the company provide EPF (12%) contributions from the employer's side?

3) Is the employee eligible for all leave benefits, bonus, and gratuity?

4) Will the company maintain the same salary structure at the age of 60?

Your valuable guidance will be highly appreciated as our Head Office is in Mumbai.

With Regards,
Haridas

Dear Saikumar Sir,

I appreciate your assistance with clarifying the following points for better understanding and updating:

1) If an employee continues his service after the retirement age, will his name be on the master roll?
2) Will the company provide EPF (12%) contributions from the employer's side?
3) Is the employee eligible for all leave benefits, bonus, and gratuity?
4) Will the company maintain the same salary structure at the age of 60?

Best Regards,
Haridas

The following clarifications are needed to understand the circumstances. What is the age of retirement? Why were you not retired upon reaching the age of superannuation and allowed to continue even after retirement? Were you retired upon reaching the age of superannuation, and were you continued thereafter? If so, were you taken up as an employee with your name on the muster roll? Or were you continued under a different status like "consultant"? Was the company deducting PF contributions from your remuneration even after your retirement?

Regards, B. Saikumar

Details on Retirement and Continuation of Service

The age of retirement in our company is 60 years.

Continuation Beyond Retirement Age

Since my retirement age is 60 years, I am still continuing in my organization and will retire in September 2016. Earlier, one person retired at the age of 60 years (Senior Executive), and I am the second one approaching retirement.

Employment Status Post-Retirement

My name is already on the muster roll, and I am a regular and permanent employee. After completion of 58 years, no contribution to the pension fund is made. Thereafter, employer and employee contributions are going to my EPF account. I am also drawing an EPF pension after 58 years.

In consideration of my experience, quality, capability, potential skill, and caliber, they will consider extending my service further, subject to legal clearance as per the Maharashtra Shops and Establishment Act. My post is Deputy Manager. Trust I clarified.

Queries About Continuing Service After Retirement

1) After 60 years, will they put my name in the muster roll?
2) Will they provide EPF contribution?
3) Is the employee eligible for all leave benefits, bonus (ex-gratia), and gratuity?
4) Will they keep me as a regular employee, consultant, or on a contract basis?
5) I am medically and physically fit.

Awaiting your valuable guidance on my above case.

Best Regards,
Haridas

Dear Tmrao79,

My views on your query are as follows.

Pension Calculation Factors

The pension calculation involves some mathematics and details. In your case, your pension calculations are subject to the following factors. Since you have chosen to exit from service before reaching the age of 58 years, you are entitled to only early pension and not superannuation pension. It also depends on your pensionable service and pensionable salary. Your pensionable service will be the aggregate of your 'past service,' which is from the date of joining to 15-11-1995 (prior to the new EPS 1995), and your actual service, which is from 16-11-1995 till the date of your exit. Your pensionable salary will be the average of monthly pay drawn by you for the period of 60 months preceding the date of exit. Again, your early pension is to be calculated both in respect of past service and actual service in the manner specified in sub-para (4) of Para (12) of EPS 1995, and an aggregate of both yields the figure for your early pension. Since you opted for the option before 58 years, your early pension needs to be reduced by 4% for each year of the shortfall of 58 years.

I request you to go through the provisions of paras (9), (10), (11), and (12) of EPS 1995. Since you have details with you, you can calculate the early pension, and in case of any difference with the figure of the PF department, you can make a representation to them.

Regards,
B. Saikumar

I have gone through the details provided by you. To the best of my knowledge, the Maharashtra Shops and Establishments Act does not govern the issue of your retirement. Either the company service rules must have fixed the age of retirement or the terms of your letter of appointment. My replies to the queries raised by you are as follows:

1) They can extend your age of retirement, having regard to your fitness and efficiency if the same is provided either in the service rules or agreed upon in the letter of appointment. If they extend your age of retirement, you will continue to be a regular employee and therefore can be on their rolls. However, whether you will be continued as a regular employee or re-employed as a consultant after retirement will be at the entire discretion of the company.

2) They can contribute to PF only even after 60 years of age if you are continued as a regular employee and if you do not withdraw the amount but not to the pension fund.

3) If you will be considered a regular employee, you will be admitted to benefits like leave and bonus as are admissible to other regular employees.

Please note that these are only my views meant for your understanding and guidance.

Regards, B. Saikumar

Retirement Age and Service Extension in India

No labor law in India regulates the retirement age by fixing a particular age beyond which an employee should not work. Even in the Employees' Provident Fund and Miscellaneous Provisions Act, there is no specified retirement age. However, under the pension schemes, a retirement age of 58 is specified.

In the absence of standing orders or service rules, the appointment letter will typically indicate the retirement age. Haridas, being in a managerial capacity, will have his service conditions governed by applicable service rules or appointment orders. Granting an extension is solely a management prerogative, and no employee should demand that their service be extended as they wish. If the management offers an extension, the employee can accept it, and the remuneration may not necessarily be the same or have similar benefits as those available to other employees. If the management decides to extend service after paying gratuity and other retirement benefits, the extended period of service will be subject to revised service rules. There is no strict rule stating that all employees should have equal service rules; different categories of employees may have different service conditions. For employees over 60 years old, there may be fixed-term appointments for 1 or 2 years, with conditions such as no contribution to PF as they may have already withdrawn PF accumulations and become PF pensioners. Excluding such employees from PF contributions would not be illegal.

In essence, the extension of service is an offer from management with attached service conditions. It may be similar to on-roll employees or different. If the management chooses the former, it is advantageous to have an extension with full benefits. In the scenario where a new appointment is given after settling dues like gratuity and allowing the employee to access their PF accumulations and pension, it may be without PF benefits. Even in this case, if the employee works for another five years, they would be eligible for gratuity again, as there is no age limit or restrictions on appointments under the Payment of Gratuity Act.

Regarding bonuses, the company may have two policies - one for regular employees and another for those on contracts. If the management limits bonus payment according to the Payment of Bonus Act, you cannot demand it if your qualifying salary for the bonus is over Rs 21,000 per month. Settlements may differ for on-roll employees compared to others, with rare cases of similarities.

Regards, Madhu.T.K

Retirement and Gratuity Queries

I joined the service in June 1984. My retirement age was in August 2011, but management verbally asked me to continue with a revised salary and a change of duty from teacher to office duty. Gratuity was not settled upon retirement, and I was in continuous service. I was given PF until March 2014. Later, I received a consolidated sum as pay from April 2014 onwards until my superannuation in June 2015, but my PF contributions were stopped by the employer from April 2014.

Queries Regarding PF and Gratuity

1) Should PF have been deducted on the consolidated pay at 12% for the period April 2014 to April 2015?
2) Am I entitled to Gratuity for the service between 1984 to 2015 on the consolidated pay? Kindly clarify whether the extended period after retirement is entitled to gratuity as there was no break in service?

Gratuity and PF Contributions After Retirement

I think you have not gone into detail through my post. If you were asked to continue after retirement, you are supposed to have worked until 2015, the date on which you were officially relieved. If so, you will receive gratuity until 2015.

Regarding PF contributions, if you had not withdrawn the PF, you should continue to contribute from your consolidated salary. Obviously, the employer should also contribute their share based on the same salary.

On the other hand, if you had withdrawn the PF in 2014, then no further contributions are required because by then you would have become an excluded employee.

Regards, Madhu.T.K