Hiring Retired Employees as Consultants: What Are the Pros and Cons in Your Experience?

Dear Friends,

We have a policy of providing employment after retirement on a consultant basis for retired employees, as an honorary gesture for their services, on mutual terms. However, we need insights on the advantages and disadvantages from fellow mentors as we are reviewing the policy.

Should these appointees receive benefits on par with regular employees? What are the different industry practices?

Your advice is truly appreciated and valued.

Dear Shweta,

Are you confused between the "employee" and "consultant"? The definition of an employee is "a worker who is hired to perform a job," whereas the definition of a consultant is "an expert who gives advice." How can a person be an employee and a consultant at the same time?

Employees are paid to do a certain quantum of work in a given span of time with defined accuracy. In contrast, consultants provide consulting or advisory services based on their experience, industry contacts, market knowledge, etc.

Rehiring an Employee After Retirement

As long as a person is able to meet the performance targets of his/her job, hiring or rehiring after retirement does not matter. Therefore, I recommend you look at the ability to meet the performance targets and nothing else.

As stated earlier, retired employees are fit for advisory roles. They are more suitable for jobs like drafting contracts, vetting contracts, devising policies, negotiations, etc. They may not be given skill-based jobs. After 55, the faculties of many persons slow down, though they remain intellectually sharp.

Retired persons may not be that techno-savvy. Juniors who are habituated with WhatsApp or Facebook may find it boring to deal with older individuals. Make sure that juniors are not frustrated with the old ways of the retired personnel.

Thanks,

Dinesh Divekar

Dear Shweta,

The other side of the coin

To look at it, there is always the other side of the coin. We have experienced instances where retired employees are no less enthusiastic than freshers, whether it be with the latest applications or imparting knowledge. Many freshers are seen as lacking knowledge in their academic line and are lukewarm in seeking and gaining the required information in their execution. This sort of mental state in them irks the seniors most, resulting in more workload for the seniors, including those re-engaged retirees. Of course, one cannot compare the utility of freshers with the retired; it is unfair. But age is only a number. It is misplaced to generalize that once retired, he/she becomes slow and lethargic. It is possible that persons suffering from certain ailments at retirement tend to be underprepared to continue with that much workload, but this is definitely not the majority. Backed by an enormous wealth of knowledge and work ethics, there is no reason to undermine their utility for the good of any establishment.

Compensation and retention

In the same breath, it’s unjust to pay them less. Many organizations extend services beyond superannuation with the same terms and conditions, of course, subject to one's policy providing for such an arrangement. I have come across persons who are retained by paying them more as well. Except for the disadvantage that he/she snatches employment opportunities from young job seekers who could be breadwinners for their families, I don’t find anything wrong in re-engaging them in cases of dire need, which is always there. Better not look down upon them just because they are available for retention. Why not more, since they would turn out more than expected (even unexpected things too, as they could visualize in advance more than you would, using their past experience)? Of course, the compensation package and methodology would vary from person to person depending on various factors.

Thank you, Dinesh and Kumar! The points made are well taken.

Apart from remuneration, can they be given equal benefits as employees? Such as leave, bonus, insurance, etc.

For consultants, bonuses and other benefits cannot be directly paid. If those are paid, they are to be treated as employees. Apart from that, they cannot be taxed as normal employees. For consultants, TDS is to be calculated as per section 194J of the Income Tax Act.

Regards,
Mahesh HMM

Employment Benefits for Retired Employees

Nothing prohibits granting them leave, bonus, or ex-gratia, pickup and drop, medical facilities (health insurance), even gratuity and PF. There is no legal impediment to granting them these benefits. However, for operational reasons, if unavoidable, they could be given a break in service for obvious reasons. There is no compulsion; they could only be retained as consultants but can be appointed or extended on a contract basis either with a consolidated package or with other defined perks. It is possible.

Employee Status for Retired Consultants

What's wrong if they are called an 'employee'? After all, they are expected to do an employee's job. Let's call a spade a spade. There are several instances in government departments, scientists, technocrats, IAS/IPS officers, and so on. What's blocking when it comes to private companies?

Sweta, not all retired persons can bring a wealth of knowledge and experience that can add value to the business. They should be engaged selectively based on the organization's pressing needs and specialized knowledge and experience. Therefore, the policy of reengaging them as consultants, regardless of the above considerations, may be beneficial to the person but perhaps not to the organization. Some retired persons may be fit enough to work, so it may not be prudent to use them on a full-time basis in the role of advisers/mentors or to tackle some emerging specialized tasks. They can be hired on a part-time, temporary, or assignment basis with flat/fixed remuneration considering the value of the work they bring in. It is better not to treat them on par with the regular staff for service conditions but treat them as a 'specialized category' based on their knowledge and experience. Their remuneration will differ from case to case, and no 'one-size-fits-all' formula may work.

Regards,

V.L. Nagarkar

HR Consultant