How Can We Retain a Senior Employee Post-Retirement Without Using a Consultant Role?

Dear Seniors, The retirement age in our company is 60 years. However, we wish to retain the services of one senior-level person as an employee. Considering his current health conditions, we propose reducing his working days from 5 days a week to 4 days a week. The remaining working rules will stay the same.

Proposal for Continued Employment

Can we achieve this by issuing him a separate letter stating the continuation of service, along with the updated working schedule?

I understand that it is typically recommended to classify such extensions as "Retainers/consultant," but due to certain internal reasons, we prefer not to take that approach. Your suggestions are appreciated.

Yes, you can issue an order deferring his retirement from service for a period of, say, one year or 6 months or until further orders, as it may be decided. It can be mentioned that during the extended period of service, the employee will attend to the work allotted to him from the office for 4 days every week. All other terms and conditions of his service will continue as hitherto before.

My suggestion is that we close his service when he completes sixty years. Pay his full and final settlement, including bonus, gratuity, and leave encashment.

Your internal reasons do not allow for him to stay as a consultant/retainer. As an HR professional, you need to create the possibility and develop the policy for these individuals. Present it to the management for approval; otherwise, you will face the same situation at the time of retirement for other senior employees.

Regards, Murthy

Dear CiteHR member Ms. Gayatri P,

The two views advised by KKHR and Shri Murthy are not incorrect, but for an appropriate opinion, full information about your company has not been provided, such as:

1. Whether your company is a Limited/Private Limited company?
2. Whether there is a Board of Directors in the company?
3. Who is the competent authority to make a final decision?
4. Whether the age of retirement and other terms and conditions of service are approved by the Board of Directors or by some other authority?
5. What will be the pay, perks, and allowances during the extended period of service?
6. Whether the extension will be granted upon production of a medical fitness certificate?
7. What are the benefits and family entitlements in case an employee dies in harness?

An appropriate opinion can be offered upon receipt of the above information.

Regards,
Chandra Mani Lal Srivastava
Master Consultant
[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]
New Delhi

Dear Mr. Srivastava,

Thank you for inciting logical thought processes. Please find my responses below:

1. Is your company a Limited/Pvt. Limited company?
Ltd

2. Does the company have a Board of Directors?
Yes

3. Who is the competent authority to make a final decision?
Director

4. Are the age of retirement and other terms and conditions of service approved by the Board of Directors or another authority?
No. Retirement is as per the service rules, with an additional 5 years mentioned in the appointment letter.

5. What will be the pay, perks, and allowances during the extended period of service?
Similar, but we are reducing the working week from 5 days to 4 days.

6. Will an extension be granted based on the production of a medical fitness certificate?
No. The individual is at a CXO level, and the company is considering an extension.

7. What are the benefits and family entitlements if an employee dies in service?
Currently, we have a Personal Accident Policy and Covid Term Insurance. However, the individual may be well-insured privately.

Warm Regards,
Gayatri

Dear CiteHR member, Ms. Gayatri P.,

It is a fine gesture on your part to post a prompt response. My opinion is as follows:

1. There is no legal bar to granting an extension to any employee of the company beyond the prescribed age of 60 years. The only condition should be that the concerned employee is physically active and mentally alert. Since the company seems satisfied with these aspects, the extension may be granted at the discretion of the Competent Authority.

2. The period of extension depends on the essentiality of circumstances and the requirement of appropriate talent. There is no legal bar to granting an extension for one, two, or three years at a time, provided the extension is qualified with a pre-closure clause, allowing the company to terminate the extension without notice or compensation in lieu of notice. However, the employee on an extended term shall be bound to give a notice of a requisite period as decided by the Competent Authority.

3. Since your company is a limited company, it would be appropriate to have the service rules approved by the Board of Directors. There have been instances when a decision of one Director has been questioned by the Board.

4. A clause allowing the extension of service for deserving cases beyond 60 years, not as a matter of right for the employee, may be considered to be inserted in the service rules with the approval of the Board of Directors.

I hope this will be helpful in making a decision for your company.

With regards and good wishes,

Chandra Mani Lal Srivastava
Master Consultant
[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]
New Delhi/11:11 am