Approaching Retirement: How Should HR Ensure Continuity for a Senior Employee?

In our company, an employee is working in a senior-level position, and his retirement is approaching. Management is interested in ensuring the continuity of his service. What procedures should be followed by HR in this case? We have issued an appointment order stating that the retirement age is 58. Please advise.

Retirement and Reappointment Process

You allow him to retire from his services, settle his accounts, and ensure all statutory payments to him. After a span of a few days, you appoint him on a retainership basis by issuing a fresh appointment letter for 1-2 years (to be renewed on mutual consent) on a fixed monthly salary (all-inclusive) with a changed designation.

Procedure for Extending an Employee's Service

You can issue him an order extending his services for a mutually acceptable period. Before that, after ascertaining his wishes, you can formally write to him seeking his concurrence for the extension of service. Upon receipt of his consent, you can issue a formal order, and his retirement would stand deferred until such time.

I don't think there will be any impediment to giving him an extended tenure without a break. Before making a decision, consider these aspects as well:

1. What is the ultimate purpose? If you decide to extend his service for further periods, you may extend with a 'break' or without a 'break'. 'Without a break' means it would be a 'continuous service' and enable the employee to receive gratuity until his retirement, including the extended period. This unbroken extension may be opted for by the employee, which is favorable to him; it may also impact EPS.

2. You may need to revisit your terms & conditions/HR Policy to make proper amendments.

3. If you decide to effect a break-in-service, it will be considered a new innings, and consequently, his terms & conditions have to be redrawn.

4. If the above point is the decision, you have to arrange for F&F settlement.

5. This dispensation may be cited as a precedent in the future.