How Should We Handle Final Settlement for Rehired Senior Employee Facing Layoff?

Our company gave full and final settlement to a senior employee (at the age of 60) in 2015 and hired him again in mid-2017 (at the age of 62). Because of the pandemic, it is not possible for us to employ him anymore. We have some confusion on how to calculate the full and final settlement.

Should we treat this case as a "retirement" at age 65, wherein we don't have to pay him retrenchment?

Should we treat this case as a layoff and pay him retrenchment for the 2.5-3 years he has served in the second inning?

Reemployment of a retired employee

Reemployment of a retired employee on a regular basis in the same establishment is essentially a new period of service for all employment purposes. I believe you would have issued orders to that effect when you rehired him. It may be best to have a conversation with him regarding your difficulties in retaining him any longer and kindly request him to resign. In this scenario, there would be no need to address terminal benefits such as gratuity or retrenchment compensation. If his financial situation is challenging, you could consider providing him with an amount equivalent to those benefits.

Retrenchment considerations

Conversely, if he falls under the category of a "workman" employee and you need to retrench him, you must adhere to all the formalities outlined under section 25-F of the IDA, 1947. If he is classified as a managerial employee, you should follow the unilateral termination clause specified in the reappointment contract.

Please let me know if you need any further assistance.

Best regards,
[Your Name]