Rehiring a Retired Worker: Can It Be Done and What About Their Insurance?

Rehiring a Retired Worker

A worker is retired, but the factory needs that person. Can the worker be rehired, and what steps should be taken regarding his insurance?

Insurance Options for Retired Factory Worker

A skilled factory worker retired at the age of 58. However, he is very important to the organization/factory. Therefore, the management has decided to keep him on cash payment and arrange for his insurance. We cannot deduct his PF and ESIC from the cash payment. Could you advise on the insurance coverage options available for him?

The factory is also covered by ESIC.

Regards, Sanjay

As far as I know, there is no age limit for coverage under ESI. When the salary of an existing member/employee exceeds the threshold during the contribution period, contributions are to be made based on the actual salary until the end of the contribution period. Only after that, the individual would cease to be a member due to the higher salary.

Of course, you can reemploy a retired employee, but why would you prefer to pay him in cash? How will you account for it? In such a situation, you can consider taking an insurance policy under the Employees Compensation Act, 1923, provided that his salary is more than Rs. 21,000 per month.

You can rehire him as a consultant, or your organization can pass a resolution that Mr. X's retirement period is increased for a period. Then he will be able to avail all earlier facilities.

Thanks,

S. Kumar