I have a client. They are involved in the agrochemical input solution business. Recently, one of the top-level management staff (GM) who had put in 13 years turned in a letter of retirement. This was, however, more like a preemptive move as my client had actually been having issues concerning the level of his performance for some time. He had not been meeting his sales target and had been given a deadline by the CEO to address that. Just before the deadline, he rather turned in his retirement!
Incidentally, he is one of the pioneer staff of the company. My client, being the owner of the company, does not have any formal retirement/severance plan for his employees. My client, who is the CEO, felt that what the employee ought to submit was a letter of resignation rather than retirement and consequently advised this employee to withdraw the letter and appropriately submit a resignation letter.
Should there be any entitlements to the exiting staff? I need your thoughts on this matter.
From United Kingdom
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Incidentally, he is one of the pioneer staff of the company. My client, being the owner of the company, does not have any formal retirement/severance plan for his employees. My client, who is the CEO, felt that what the employee ought to submit was a letter of resignation rather than retirement and consequently advised this employee to withdraw the letter and appropriately submit a resignation letter.
Should there be any entitlements to the exiting staff? I need your thoughts on this matter.
From United Kingdom
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Hi Law,
You have posed an interesting query.
"I have a client. They are involved in agrochemical input solution business. Recently, one of the top-level management staff (GM) who had put in 13 years turned in a letter of retirement. This was, however, more like a preemptive move as my client had actually been having issues concerning the level of his performance for some time. He had not been meeting his sales target and had been given a deadline by the CEO to address that. Just before the deadline, he turned in his retirement! Incidentally, he is one of the pioneer staff of the company. My client, being the owner of the company, does not have any formal retirement/severance plan for his employees.
What do you mean by retirement? Maybe you need to look at laws. The normal practice of retirement is when one reaches the age of 58 or 60 years. Then the person is deemed to be retired and is entitled to all statutory benefits. If after 60 years they work, they are retained as Consultants and not as employees.
"My client, who is the CEO, felt that what the employee ought to submit was a letter of resignation rather than retirement and consequently advised this employee to withdraw the letter and appropriately submit a resignation letter. Should there be any entitlements to the exiting staff? I need your thoughts on this matter."
Your client is right that he should submit the letter of resignation if he wishes to work somewhere else. Benefits - Severance package of 3-6 months gross salary.
Hope this helps.
Cheers,
Rajat
From India, Pune
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108You have posed an interesting query.
"I have a client. They are involved in agrochemical input solution business. Recently, one of the top-level management staff (GM) who had put in 13 years turned in a letter of retirement. This was, however, more like a preemptive move as my client had actually been having issues concerning the level of his performance for some time. He had not been meeting his sales target and had been given a deadline by the CEO to address that. Just before the deadline, he turned in his retirement! Incidentally, he is one of the pioneer staff of the company. My client, being the owner of the company, does not have any formal retirement/severance plan for his employees.
What do you mean by retirement? Maybe you need to look at laws. The normal practice of retirement is when one reaches the age of 58 or 60 years. Then the person is deemed to be retired and is entitled to all statutory benefits. If after 60 years they work, they are retained as Consultants and not as employees.
"My client, who is the CEO, felt that what the employee ought to submit was a letter of resignation rather than retirement and consequently advised this employee to withdraw the letter and appropriately submit a resignation letter. Should there be any entitlements to the exiting staff? I need your thoughts on this matter."
Your client is right that he should submit the letter of resignation if he wishes to work somewhere else. Benefits - Severance package of 3-6 months gross salary.
Hope this helps.
Cheers,
Rajat
From India, Pune
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Hi Rajat,
If we accept that he should be resigning instead of retiring, then should the company be obliged to pay him for resignation? Who actually should be paying the other? My client or the exiting employee, who should actually give some 3 months' notice. If severance obligation was not part of his engagement/employment offer, should the company be liable to pay him? So many questions..!
LAW
From United Kingdom
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If we accept that he should be resigning instead of retiring, then should the company be obliged to pay him for resignation? Who actually should be paying the other? My client or the exiting employee, who should actually give some 3 months' notice. If severance obligation was not part of his engagement/employment offer, should the company be liable to pay him? So many questions..!
LAW
From United Kingdom
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Hi Law,
"If we accept that he should be resigning instead of retiring, then should the company be obliged to pay him for resignation? Who actually should be paying the other?"
A good question...
"My client or the exiting employee who should actually give some 3 months' notice. If severance obligation was not part of his engagement/employment offer, should the company be liable to pay him?"
If that being so, then you have to ask him to serve a three-month notice period failing which you have a right to recover the same. Also, ensure henceforth all existing appointment letters are reviewed.
Rajat
From India, Pune
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"If we accept that he should be resigning instead of retiring, then should the company be obliged to pay him for resignation? Who actually should be paying the other?"
A good question...
"My client or the exiting employee who should actually give some 3 months' notice. If severance obligation was not part of his engagement/employment offer, should the company be liable to pay him?"
If that being so, then you have to ask him to serve a three-month notice period failing which you have a right to recover the same. Also, ensure henceforth all existing appointment letters are reviewed.
Rajat
From India, Pune
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There is an interesting development. The existing staff has rather turned in a resignation instead of retirement as demanded by my client. Then, my client actually decided to pay the exiting staff's salary for 12 months gratis, but monthly in arrears. That means he will not get the entire money in bulk as a way of ensuring compliance with no violation of vital proprietary company information, and he does not do damage to my client's business, having been privy to most of his strategic marketing and sales plans of the company, especially for this year. The exiting staff was, in addition, asked to take for free his official car bought by the company. The other reason for deciding to pay him is to maintain the morale of the existing staff. What do you guys think?
From United Kingdom
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From United Kingdom
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Dear Ed Llarena, Jr.,
Your name implies the essence of the answers to your many questions. Indeed, the labor or local law where your client is operating will have much to say on the procedures for separating an employee and the extent of benefits that he/she is entitled to.
In our part of the world, the dismissal of an employee with regular employment status has specific procedures to comply. Non-compliance with the requirements can mean "illegal dismissal," reinstatement, back pay, and possible moral/exemplary damages for the company.
Asking an employee to resign (whether managerial or rank and file) can be considered as "constructive dismissal" if not done properly, and the labor or local law has provided for it.
Separation benefits are normally tied up with the length of service an employee has with the company. Our country's labor law provides a minimum of 50% of the current salary (per year of service) as a legal entitlement.
The offer of one (1) year staggered pay (plus a used car) can be viewed as attractive depending on the basic legal entitlements, which should be used as a benchmark. However, if I am the concerned employee and we have the necessary laws in place against "constructive and illegal dismissal," I will sue the employer for better returns.
By the way, paying separation benefits in installment, and with necessary conditions, is plain harassment. The employer can protect its interests via a "waiver and quit claim" that includes provisions that protect it against all fears (whether valid or unfounded).
You seem to imply that your client is acting ahead of your legal advice. Is he? If he does, I am wondering about the ethical practices in your country's legal practice.
Best wishes.
Ed Llarena, Jr. Managing Partner Emilla Consulting
From Philippines, Parañaque
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Your name implies the essence of the answers to your many questions. Indeed, the labor or local law where your client is operating will have much to say on the procedures for separating an employee and the extent of benefits that he/she is entitled to.
In our part of the world, the dismissal of an employee with regular employment status has specific procedures to comply. Non-compliance with the requirements can mean "illegal dismissal," reinstatement, back pay, and possible moral/exemplary damages for the company.
Asking an employee to resign (whether managerial or rank and file) can be considered as "constructive dismissal" if not done properly, and the labor or local law has provided for it.
Separation benefits are normally tied up with the length of service an employee has with the company. Our country's labor law provides a minimum of 50% of the current salary (per year of service) as a legal entitlement.
The offer of one (1) year staggered pay (plus a used car) can be viewed as attractive depending on the basic legal entitlements, which should be used as a benchmark. However, if I am the concerned employee and we have the necessary laws in place against "constructive and illegal dismissal," I will sue the employer for better returns.
By the way, paying separation benefits in installment, and with necessary conditions, is plain harassment. The employer can protect its interests via a "waiver and quit claim" that includes provisions that protect it against all fears (whether valid or unfounded).
You seem to imply that your client is acting ahead of your legal advice. Is he? If he does, I am wondering about the ethical practices in your country's legal practice.
Best wishes.
Ed Llarena, Jr. Managing Partner Emilla Consulting
From Philippines, Parañaque
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07 Resignation, Retirement & Terminal Benefits.pdf
Employee Benefits.doc