Is It Legal to Set Retirement Age at 55 When the Norm Is 58 in Goa?

Dear Seniors,

After joining the organization, I checked the appointment letters of the employees, wherein the clause of retirement stated the age as 55.

In Goa, the prevalent retirement age for private sector employees is actually 58 years. When I brought this to the attention of the higher management, they instructed me to keep the retirement age at 55. Now, the question arises: is it legal to maintain the retirement age at 55?

Thank you.

Under which Act in Goa is it mentioned that the retirement age of private sector establishments is 58? My understanding is that there is no such Act other than the Standing Orders which can regulate the retirement of employees.

Yes, sir, we have not found the same mentioned in any act, but most organizations keep 58 as the retirement age. Now the question is whether keeping age 55 as the retirement age is legal.

There is no illegality in keeping the age at 55. You can frame a standing order, and in that standing order, if you keep the retirement age at 55, then that becomes a binding contract. Even a clause about the retirement age in the appointment order is sufficient to establish it. But as you said, for all companies, the retirement age is either 58 or 60. Under EPF, the age for getting a pension is 58. Therefore, your employees will have to wait for three years without any job to get a pension from the EPFO. That is very bad and miserable also. Moreover, with the life expectancy increasing, there are states increasing the retirement age for their government services.

Well!! It is an exciting topic for discussion.

Dear Mr. Pundalik,

Allow me to present you with legal grounds to support your efforts in persuading your management.

Regarding the provision of law concerning retirement age:

The retirement age for employees engaged in industrial employments in Goa is regulated by the Industrial Employment [Standing Order] Act, along with its associated rules. According to these rules, the current retirement age in Goa is 58 years. Therefore, it is important to acknowledge that the law explicitly addresses the issue of retirement age.

Concerning the possibility of establishing certified standing orders for 55 years:

In several instances, the Honorable Supreme Court has ruled that when the certifying authority disregards provisions outlined in the model standing orders, which affect either party, such decision becomes null and void. In other words, any attempt to reduce the retirement age to 55 years, contrary to the model standing order's prescribed age of 58 years, lacks legal validity.

Regarding conflicts between agreements/appointment orders (including certified standing orders) and legal provisions (model standing order provisions):

Numerous recent judgments [you can get plenty of cases in HCs including Division Bench] have established the well-settled law that in situations of such conflicts, the provisions of the model standing order take precedence over any other agreement, appointment order, or certified standing order entered into between the employer and the workers.

Please note that laws enacted through legislative and regulatory control prioritize public interest and have the authority to supersede agreements/settlements made between two parties.

While suggesting the above to Mr. Pundalik, I am led to believe that the opinion of Learned Senior Mr. Madhu T K, regarding the certification of standing orders or including a clause in the appointment order, holds no legal weight.

No such rules exist to fix the retirement age at 55 years. In government service, the retirement age is a maximum of 60 years. For the calculation of pensionary benefits, qualifying service is restricted to 33 years of service.

Dear Srinivas,

Can you please share with me under which section of the Standing Orders the retirement age is fixed at 58? Or is there any state rule that specifies this? Similarly, could you also share a judgment that rules that private establishments should provide employment until the age of 58?

In my understanding, the retirement age is regulated by means of appointment orders and certified standing orders.

Long long ago, about 50 years back, McNeil's Company had its Standing Orders certified by the Notified Authority. The age of retirement was mentioned as 55 years. If my memory serves me correctly, two of the leading conglomerates in Chennai had additional provisions that allowed for an extension of service post 55 years for one year, renewable for another two years subject to being medically found fit.

Statutory Rules on Retirement Age

There must be some statutory rule regarding the retirement age of employees. If left to organizations to decide, we might soon find people being retired at 40. Surely there is some regulation binding on private organizations.

Dear Mr. Madhu T K,

Q1. Where can I find the reference for retirement age?

Ans: For information on the retirement age, please refer to the state-specified Model Standing Orders or Clause-3 of Schedule – 1[B] of the Central Rules. The retirement age is typically noted as either 58 or 60 (in some states). For your understanding, the Central Rules MSO is provided below:

“The age of superannuation for a workman is determined by mutual agreement between the employer and the employee as stated in a binding agreement, settlement, or award. In the absence of such an agreed age, retirement or superannuation occurs when the workman reaches 58 years of age.”

If there is a question about whether the retirement age outlined in the MSO applies even if there's an agreement or settlement between the employee and employer for a lesser age, consider the following judgments. These are cases in which companies have failed, from the certifying authority to the Supreme Court, to rely on agreed terms or a younger age than what is specified in the Model Standing Orders:

1. The Management Of M/S Grasim ... vs The General Secretary on 5 July 2022 [HC Division Bench]
2. Management of Federal Mogul Goetz India Pvt Ltd., Vs ALC [HC – Note: an SLP filed by Mgt. before the Supreme Court was rejected]

Q2. Is there a rule or judgment that mandates private establishments to provide employment until the age of 58?

Ans: While there is no explicit rule stating that private establishments must provide employment until the age of 58, it is implied from the above-referenced judgments that the age specified in the Model Standing Orders is binding for companies, failing which the same is voidable.

Hope I made it clear to you.

Mr. Srinivas, the Model Standing Order is a model only and cannot be accepted as final (certified) standing orders. In this case, there exists a retirement age as per their appointment orders, which is binding as stated in the Model itself. When there is a clause about retirement age in the contract of employment and in the absence of certified standing orders that provide for the same, the retirement age should be as per the appointment order only. The retirement age is one of the terms and conditions of employment, accepted by the employee, and binding on him.

I have not gone through the judgment in detail due to some preoccupied engagements but will get back with a detailed note on it. Thank you for sharing the judgment. Please share the citation for easy reference.

Dear Sir,

I would like to emphasize the importance of ensuring that certified standing order provisions align with the framework outlined in the Model Standing Orders (MSO). Any deviation or exceeding of the provisions of the MSO by the certifying authority renders such actions null and void. This issue was observed in the case of "Geep Industrial Syndicate vs. Geep Industrial Syndicate (1999) ILR 1999 KAR Equivalent citations -3258, 1999 (6) KarLJ 521, (1999) IILLJ 1197 Kant," which I encourage you to review.

Both employees and employers have the freedom to include terms and conditions of service and mutually agree upon them. However, these terms must be fair, just, and within the framework of the law of the land. It is worth noting the "Federal Mogul Goetz India Pvt Ltd., Vs ALC" case, where it was held that settlements between parties can be disregarded in exceptional circumstances if they are demonstrably unjust, unfair, and contrary to the spirit and basic principles of the agreement.

Furthermore, way back in the year 1959 itself, in the case of "Guest, Keen, Williams Private Ltd vs. P. J. Sterling and Others (1959)," the Supreme Court highlighted various factors to consider when determining a retirement age. These factors include the nature of assigned work, wage structure, retirement benefits, amenities provided, climate conditions, and prevailing practices in comparable industries within the same region.

Therefore, it is not surprising that most private industries have chosen 58 years as the retirement age, which is also the base age mentioned in the MSO. Otherwise, they could potentially take undue advantage of the situation by setting an earlier retirement age, such as 40 years, and asking employees to sign and acknowledge it, only to send them away when they reach the age of 40.