Can Employees Over 58 Stay on Payroll in IT Companies and Is EPF Deduction Required?

Wanted to know the age limit of an employee who can work in a private company (IT) and also whether he can be in service and on the company's payroll. Is EPF deduction mandatory after the age of 58 years.

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In a private company, the age limit for employees to work is usually determined by the company's policies and the local employment laws. Generally, there is no specific age limit for employees to work in a private company. However, retirement age policies and benefits may vary.

Regarding EPF deduction, it is advisable to check with the company's HR department or refer to the EPF regulations to determine if EPF deductions are mandatory for employees above the age of 58 years. EPF regulations may vary based on the country and specific employment laws.

Age Limit for Employment in Organizations

No labor law prescribes the maximum age for the recruitment of employees afresh nor for the continuation of existing employees in the service of any organization. These aspects are governed by the respective Service Rules and Regulations of individual organizations, both in the Public and Private Sectors.

Of course, model standing orders framed under the Industrial Employment (Standing Orders) Act, 1946, prescribe 58 years as the age of superannuation. However, it is a guideline only, and the organization can fix a lower or higher age for retirement depending upon the nature of service, physical standards required for the positions, etc. It is well within the discretion of the Management to extend the services of an employee in the interest of the organization beyond the age of superannuation with the willingness of the employee concerned. Alternatively, the services of such an employee can be utilized further on a Fixed-term Contract basis or as a Consultant on a retainer basis, depending upon the position.

Challenges in Extending Employment Beyond Superannuation

However, the inherent demerit of such an arrangement is the indication of ineffective or no Succession Planning in place, nepotism, denial of promotion opportunities to juniors, etc. There is no provision for the continuation of membership of such employees in the EPF beyond 58 years of age.

Hi,

To add further to Mr. Umakanthan's comments, the contribution towards EPS part in the provident fund would be stopped and diverted to EPF only, i.e., 8.33% of the employer's portion. The full 12% of the employer's portion would go to EPF instead.

Retirement Age in Government and Private Sectors

There is no specific age that has been fixed for a person to work up to. You can find that the Government and Central Government have raised the age limit of people working under them from 58 years to 60-62 years. The current retirement age for Supreme Court judges is 65 years, while for High Court Judges, it is 62 years.

Retirement Age in Private Establishments

The age of retirement in private establishments is determined according to the certified standing order, if applicable. In the absence of a standing order, the maximum age is typically set at 58 based on any specific rules of the establishment. In many cases, the service is extended by 1 to 2 years based on the physical condition of the individual. However, during the extended period, the individual cannot be under the Employees' Pension Scheme (EPS). To avoid the adverse implications of the system, it is advisable to consider 58 as the maximum retirement age.

Thank you.

Continuing Employment Beyond 58 Years

The comments of Shri Umakanthan Sir and other seniors are very appropriate and appreciated. Many companies do not have proper rules and end up in a peculiar situation when a person attains 58 years. Whether to continue or stop the person, etc., the PF Act does not prohibit contributing to the PF of those continuing beyond 58 years. Only the pension account stops. For those who continue coverage of PF beyond 58 years, the company's pension contribution is also deposited in the PF account, and thus the employee continues to get PF benefits, which will be a saving for him and also reduce his IT liability.

In effect, in many companies where senior-level officers are continued or given extensions, the company continues PF cover while the employee who has crossed 58 years will be getting a pension as well. Management considers this based on the utility of key posts and the person's contribution to the company, physical and mental factors, etc. Since the standing orders stipulate 58 years, workmen are generally retired at 58 years. However, for senior-level posts, depending on the need and utility of the person concerned, management can continue giving extensions, initially for 1 or 2 years or as a consultant, full-time, etc., providing certain benefits as agreed between them.

Preference for Senior Officers

Many officers in finance, audit, HR, legal, and technical posts are given preference, recognizing their past service and future needs for specific works of the department. This way, the company acknowledges the past service while also benefiting from their specific experience and contribution.

Regards

As I know, when EPF member employees reach the age of 58, they can continue their EPF membership but cannot receive pension benefits after 58 years. Yes, it is only a savings benefit for EPFO members, and other employee benefits are not available after the age of 58.

We have the option to defer pension until 59 or 60 years of age. This can be done with contributions or without contributions. In this case, we can contribute to EPS until 60.