One of the employees in our organization, who is 48 years old, is asking us to issue him a letter mentioning that his retirement age in the organization will be 65, as he has applied for a home loan and will receive some concession benefits on the loan interest. As a private firm, we do not have any such retirement policy in the organization. There are a few individuals who are working even after the age of 65, but that is all mutually decided. We have not framed any such policy.
This employee has worked for 8 years in our organization, then left the organization. Now, last year he rejoined, but we are not very satisfied with his performance.
Please suggest what to do in this case. What will happen if we provide him with this letter? Will we become liable to the retirement clause after giving him this letter?
Warm regards
From India, Mumbai
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15This employee has worked for 8 years in our organization, then left the organization. Now, last year he rejoined, but we are not very satisfied with his performance.
Please suggest what to do in this case. What will happen if we provide him with this letter? Will we become liable to the retirement clause after giving him this letter?
Warm regards
From India, Mumbai
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Ask the employee to submit a letter stating what they wish, and simply endorse their letter by mentioning "we have no objection" if the person (employee) wishes to continue, subject to labor laws applicable from time to time.
Don't issue any letters in any format.
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Don't issue any letters in any format.
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Thank you so much, ma'am. I will do this. However, I want to know for my knowledge if we give any letter to any employee, will the company have some liability towards the employee? Will we be able to terminate the employee in the future based on their poor performance.
From India, Mumbai
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From India, Mumbai
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An employer can assure of the past records of an employee and secure his benefits, but how can he assure of his future? Resignation from the job, or termination from the job... in both situations, such letters would get questioned by the loan providing authority. If the employer offers any such letter in writing, then he is bound to accept all the willful malpractice of the employee (if any) and cannot terminate him until the age of 65.
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Understanding Retirement Age Policies in Private Firms
After reviewing the initial query, the responses from the resource person, and the poster's rationale, I have a different perspective.
Firstly, it is evident that the establishment has not set a fixed age of superannuation for its employees, which is not uncommon. There is currently no legal requirement to fix the age of superannuation for industrial or private employment.
Secondly, uncertainty is an inevitable aspect of both existence and employment. Therefore, the employer cannot predict or assure the future course of employment for current employees, as rightly pointed out by the respondent member.
Thirdly, the employee might have inferred from the existing practice of continued employment beyond 65 years of age on mutual terms and requested a certificate to declare the normal retirement age as 65 for the purpose of a home loan.
Fourthly, it is at the employer's discretion to provide such a certificate or letter as requested, or to state the actual fact that no retirement age has been fixed so far. I am quite unable to see how such a certificate or letter would be an undertaking or binding on the employer in case of default by the employee due to premature termination of employment for any reason. By issuing such a letter or certificate, the employer will not become a surety or guarantor for the proposed home loan, nor will it create a legal obligation on the employer not to terminate the employee's services before the age of sixty-five due to misconduct.
Finally, this query seems to stem from the poster's hesitation based on the employee's past service and current performance only.
Warm regards
From India, Salem
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After reviewing the initial query, the responses from the resource person, and the poster's rationale, I have a different perspective.
Firstly, it is evident that the establishment has not set a fixed age of superannuation for its employees, which is not uncommon. There is currently no legal requirement to fix the age of superannuation for industrial or private employment.
Secondly, uncertainty is an inevitable aspect of both existence and employment. Therefore, the employer cannot predict or assure the future course of employment for current employees, as rightly pointed out by the respondent member.
Thirdly, the employee might have inferred from the existing practice of continued employment beyond 65 years of age on mutual terms and requested a certificate to declare the normal retirement age as 65 for the purpose of a home loan.
Fourthly, it is at the employer's discretion to provide such a certificate or letter as requested, or to state the actual fact that no retirement age has been fixed so far. I am quite unable to see how such a certificate or letter would be an undertaking or binding on the employer in case of default by the employee due to premature termination of employment for any reason. By issuing such a letter or certificate, the employer will not become a surety or guarantor for the proposed home loan, nor will it create a legal obligation on the employer not to terminate the employee's services before the age of sixty-five due to misconduct.
Finally, this query seems to stem from the poster's hesitation based on the employee's past service and current performance only.
Warm regards
From India, Salem
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(Fact Checked)-The user reply contains accurate information and provides a thoughtful analysis of the situation. No corrections or amendments are needed. (1 Acknowledge point)
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Unless an employee has made a request in "writing" for any such certificate, it's not wise to jump into an endless debate. If the employee has made an application to confirm the same, then the employer can put remarks on his "request letter" with a seal; that would be sufficient to resolve his purpose. Issuing any certificate for the "future" is unwanted for any establishment, except the offer letter for new employees.
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I fully endorse the opinion of Umakanthan Sir. In the absence of any Standing Orders or HR policy that describes the retirement age or extension of retirement age, or even the employment of persons above a certain age, the employer can issue such letters to individual employees. By providing such a letter, the employer is not obligated to employ the individual until they reach the mentioned retirement age.
Suppose the company has a standing order or service rules, and according to those rules, the retirement age is 60 or even 65 years. Does this mean the company cannot terminate an employee before they reach the age of superannuation just because there are service rules binding on the employer and employee? No. The employer can terminate the contract of employment. The rules only state that under normal circumstances, employment shall continue until the employee reaches the age of 60/65, as the case may be.
Similarly, the letter to the bank also states that the employee can be in service until 65. There is no guarantee that the employee will remain in service until that age. Even a provision regarding retirement age in the certified Standing Orders or Service Rules of the company can be amended later if the employees and the employer agree. You cannot claim that based on a retirement age of 65, you took a housing loan, and it cannot be changed to 60. If there is an understanding that the retirement age should be reduced considering business exigencies, you will have to agree to it. Therefore, I would say that there is nothing wrong or illegal in issuing such a letter. The letter only states that as of the date, the retirement age is 65, and there is no undertaking by the employer that the employee will remain in service until that date.
Regards, Madhu.T.K
From India, Kannur
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Suppose the company has a standing order or service rules, and according to those rules, the retirement age is 60 or even 65 years. Does this mean the company cannot terminate an employee before they reach the age of superannuation just because there are service rules binding on the employer and employee? No. The employer can terminate the contract of employment. The rules only state that under normal circumstances, employment shall continue until the employee reaches the age of 60/65, as the case may be.
Similarly, the letter to the bank also states that the employee can be in service until 65. There is no guarantee that the employee will remain in service until that age. Even a provision regarding retirement age in the certified Standing Orders or Service Rules of the company can be amended later if the employees and the employer agree. You cannot claim that based on a retirement age of 65, you took a housing loan, and it cannot be changed to 60. If there is an understanding that the retirement age should be reduced considering business exigencies, you will have to agree to it. Therefore, I would say that there is nothing wrong or illegal in issuing such a letter. The letter only states that as of the date, the retirement age is 65, and there is no undertaking by the employer that the employee will remain in service until that date.
Regards, Madhu.T.K
From India, Kannur
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(Fact Checked)-The user's reply contains accurate information regarding the flexibility of retirement age and the employer's ability to terminate an employee before reaching the specified retirement age. The reply aligns with the principles of employment law and organizational policies. (1 Acknowledge point)
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Thank you both for sharing your experiences and opinions in this regard. I wish to further share the specific line the employee has mentioned in his application: "Kindly issue me a letter mentioning that my retirement age would be 65." He has also asked that if we are rejecting this request, we should indicate so on the application he has submitted to us. This is why we are hesitant to provide the certificate to him, as there is no guarantee that he would be retained for another 12 months. Our management is very supportive, and we extend help to all our employees. If issuing such a letter could potentially benefit him in the long term financially, we would not mind providing it. However, as I have expressed my concern, the company's security is a priority for HR, and I need to ensure before issuing any letter. Please advise accordingly.
Regards
From India, Mumbai
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Regards
From India, Mumbai
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(Fact Checked)-The employee's request for a retirement age letter is not legally binding without an existing policy. Consider creating a retirement policy for clarity. (1 Acknowledge point)
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Your further response after carefully considering the replies of Mr. Madhu and mine is very much appreciated. Our views are not only purely based on the legal consequences of a letter or a certificate to be issued by an employer factually confirming a particular condition of employment in respect of an employee in service as of the lawful purpose of availing a loan from a legal entity but also on the aspect of positive HR practice.
Considerations for Issuing Employment Confirmation
Home loan being a long-term loan, the bank or housing finance agency normally requires such particulars in respect of salaried people for the purpose of deciding the recovery period of the loan. Hence, such a request from the employee in alternative terms may be necessary. It cannot be a valid or logical reason for your outright hesitation or refusal. You can simply mention in the certificate or letter that there is no age of superannuation fixed for your employees as of the date.
When you are not incurring any legal or moral liability in the issuance of such a letter or certificate, a guarantee of employment is a question out of context. Every business enterprise has its own unpredictable lifespan, so where is the guarantee for the employment of its human resources?
When you are not sanctioning or recommending the loan or standing as a surety to the loan, the interest of security or the standing of the company is not involved in this matter.
From India, Salem
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Considerations for Issuing Employment Confirmation
Home loan being a long-term loan, the bank or housing finance agency normally requires such particulars in respect of salaried people for the purpose of deciding the recovery period of the loan. Hence, such a request from the employee in alternative terms may be necessary. It cannot be a valid or logical reason for your outright hesitation or refusal. You can simply mention in the certificate or letter that there is no age of superannuation fixed for your employees as of the date.
When you are not incurring any legal or moral liability in the issuance of such a letter or certificate, a guarantee of employment is a question out of context. Every business enterprise has its own unpredictable lifespan, so where is the guarantee for the employment of its human resources?
When you are not sanctioning or recommending the loan or standing as a surety to the loan, the interest of security or the standing of the company is not involved in this matter.
From India, Salem
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Model Standing Orders and Retirement Age
I want to add one more point in addition to Mr. Umakanthan's and Mr. MTK's responses. If a company has no certified standing orders formally communicated either in the appointment letter or through service rules, then Model Standing Orders are applicable. If you suspend a workman, the company is obligated to pay subsistence allowance as per Model Standing Orders if there are no certified standing orders. As per Model Standing Orders, the age of retirement is 60 years.
Company's Role in Loan Processing
The company's role is limited here and is not directly or indirectly involved in loan processing, such as recommendations, sanctions, or forwarding loan applications. The company does not become a surety or loan guarantor in any way during the process of providing a letter regarding age. Its only role is to confirm the age as on the date as per the company's record.
Regards,
RDS Yadav
Director, Future Instt. of Engineering and Management Technology
Labour Law Adviser
[Email Removed For Privacy Reasons]
From India, Delhi
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I want to add one more point in addition to Mr. Umakanthan's and Mr. MTK's responses. If a company has no certified standing orders formally communicated either in the appointment letter or through service rules, then Model Standing Orders are applicable. If you suspend a workman, the company is obligated to pay subsistence allowance as per Model Standing Orders if there are no certified standing orders. As per Model Standing Orders, the age of retirement is 60 years.
Company's Role in Loan Processing
The company's role is limited here and is not directly or indirectly involved in loan processing, such as recommendations, sanctions, or forwarding loan applications. The company does not become a surety or loan guarantor in any way during the process of providing a letter regarding age. Its only role is to confirm the age as on the date as per the company's record.
Regards,
RDS Yadav
Director, Future Instt. of Engineering and Management Technology
Labour Law Adviser
[Email Removed For Privacy Reasons]
From India, Delhi
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I feel proud to participate in this "healthy" topic and read valuable inputs from all of you. However, I have some more to add.
1. I appreciate the concern expressed by the resource person that "the company's security is the first priority" as an HR person.
2. There is no harm in certifying the retirement age to an employee (loyal/honest) by which the employee can get some benefit from a third party.
3. One thing to keep in mind is that a letter or certificate extending the retirement age issued to any employee (whoever it may be) should not hover over the company in the future. It should not imply that "citing/using that certificate, the employee should demand/insist to extend his service period till the certified age." This is an area every HR person must think over.
4. No such letter addressed to the employee should be issued unless the company is willing to provide service till 65 years of age to all employees, as it will automatically apply to all employees if challenged in any labor/industrial court.
5. Alternatively, in the interest of the company and to help the employee, the company can ask the employee to get a letter from the bank on the topic and write a one-line statement & directly deliver it to the bank, without giving any copy to the employee.
Seniors, please correct me if my approach is wrong.
Regards
From India, Thane
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1. I appreciate the concern expressed by the resource person that "the company's security is the first priority" as an HR person.
2. There is no harm in certifying the retirement age to an employee (loyal/honest) by which the employee can get some benefit from a third party.
3. One thing to keep in mind is that a letter or certificate extending the retirement age issued to any employee (whoever it may be) should not hover over the company in the future. It should not imply that "citing/using that certificate, the employee should demand/insist to extend his service period till the certified age." This is an area every HR person must think over.
4. No such letter addressed to the employee should be issued unless the company is willing to provide service till 65 years of age to all employees, as it will automatically apply to all employees if challenged in any labor/industrial court.
5. Alternatively, in the interest of the company and to help the employee, the company can ask the employee to get a letter from the bank on the topic and write a one-line statement & directly deliver it to the bank, without giving any copy to the employee.
Seniors, please correct me if my approach is wrong.
Regards
From India, Thane
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Issuing a No Objection Certificate (NOC)
For the specific case, providing a NOC on the application made by the employee is more than enough, with the condition that we have no objection to continuing his employment based on good terms and conduct, and subject to state and central labor acts/laws applicable from time to time.
If the bank wants to ensure his employment, then a NOC is sufficient. However, if the bank requires it as a "guarantee," then let the bank communicate directly on the issue.
In my opinion, the issuance of any such letter from the employer's side will establish a milestone of 65 years for retirement for all other employees, which should always be kept in mind.
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For the specific case, providing a NOC on the application made by the employee is more than enough, with the condition that we have no objection to continuing his employment based on good terms and conduct, and subject to state and central labor acts/laws applicable from time to time.
If the bank wants to ensure his employment, then a NOC is sufficient. However, if the bank requires it as a "guarantee," then let the bank communicate directly on the issue.
In my opinion, the issuance of any such letter from the employer's side will establish a milestone of 65 years for retirement for all other employees, which should always be kept in mind.
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(Fact Checked)-The company may have some liability if a retirement age letter is issued. However, termination based on poor performance is possible but should be well-documented to avoid legal repercussions. (1 Acknowledge point)