Can You Keep Working After Retirement Age in India? Understanding the Laws and Employer Contributions

Retirement Laws in India

What is the law in India with respect to retirement? Can an employee continue working after reaching the retirement age as they were doing earlier, or is it mandatory to have the person on a contract post-retirement?

Employer Contribution to Provident Fund Post-Retirement

Also, I have read that the employer only contributes 8.33% to the Provident Fund instead of 12% after retirement.

Hi, In India, the retirement age is between 58 and 60 years in the private sector.

Post-Retirement Employment

After retirement, it is better to enter into a separate employment contract, preferably as a Consultant, without any statutory liabilities.

Pension and Provident Fund Contributions

After 58 years, the Pension contribution of 8.33% cannot be continued. However, PF at 12% can be continued.

Retirement Age in Private Establishments

The retirement age in private establishments is decided by the respective company and will be evidenced by the Standing Orders of the company or the appointment order issued to the employee.

Post-Retirement Service or Extension

Post-retirement service or extension of service shall be either after settlement of dues pertaining to the actual service or in continuation of the service.

Reappointing Retired Employees

Reappointing a retired employee as a consultant is a foolish act because a consultant is one from whom specialized service is obtained. A consultant is not expected to follow the office timing, hours of work, leaves, and other HR policies applicable to the employees of the company. Therefore, keeping a retired employee as a consultant is not a solution. But you can reappoint him on a fixed-term contract for a few years. Obviously, all benefits available to an employee should be extended to such persons also.

Employer Contribution to Pension Fund

After 58 years of age (not necessarily after retirement), the employer contribution to the Pension Fund at the rate of 8.33% of the PF qualifying salary will not be made by the employer, BUT he should contribute the entire 12% to the Provident Fund of the employee, i.e., the same contribution but without bifurcating it as 8.33% to the Pension Fund and the remaining 3.67% to the Provident Fund.

Retirement Age in India

There is no fixed retirement age in India. There is no parity in retirement age because different organizations have their own norms. Traditionally, it was 58, and some employers made it 60 years.

There is nothing wrong with employing someone after retirement if they are in good health. As per EPF, the retirement age is 58 years, but one continues to receive contributions without EPS. An HR professional with an acrobatic nature can balance between the lines of rules and laws in their favor.

Retirement Age and Employment in India

In India, the retirement age varies depending on the type of employment and the specific rules set by the employer or the governing authority. Generally, the retirement age for government employees is 60 years, while it may vary for employees in the private sector.

Once an employee reaches retirement age, they are typically required to retire from their regular employment. However, it is possible for an employee to continue working after retirement, subject to certain conditions. In such cases, the employee may be rehired on a contract basis or engaged as a consultant, depending on the employer's policies.

Provident Fund Contribution After Retirement

Regarding the provident fund (PF) contribution, the employer's obligation to contribute 12% of the employee's basic salary towards the PF generally continues even after retirement. However, there may be cases where the employer contribution is limited to 8.33% of the pensionable salary, subject to a maximum amount, as per the rules of the Employees' Pension Scheme (EPS). The remaining 3.67% may still be contributed to the Employee Provident Fund (EPF).

It is important to note that employment laws and regulations can be subject to updates and amendments, so it is advisable to consult the relevant authorities or seek legal advice for the most up-to-date and accurate information specific to your situation.