Compulsory retirement is a situation where an employee is required to stop working upon reaching a certain age under existing law. The last working day is usually the day before the anniversary date of the first appointment. This age differs from country to country, or even from state to state in a federal system of government. Unless, of course, the state adopts the federal law.
Retirement age may also differ for different industries or types of profession. For example, the retirement age of doctors, judges and lecturers is usually higher. This is due to the expertise that these people have.
Retirement Age Specified in Appointment Letter
Appointment letters may specify age of retirement. Employment legislation will usually contain provisions on the age when people may seek employment and at what age they will have to retire.
If you are a public service employee - an employee working for the government - you will find the provision on retirement in your appointment letter. This is because appointment letters issued by public service commissions follow a specific format.
Should you find the statement on retirement missing from your appointment letter, you will most probably find this information in the scheme of service. This is fairly explained in details in many cases.
Alternatively, the employee handbook may mention the retirement age.
Loss of retirement benefits if any of the following occurs
Resignation before benefits accrue
If you resign before the age of retirement, you will lose retirement benefits. However, there are cases where one of the terms and conditions state that you will enjoy the benefits if you have served the minimum number of years of service. Cases of this nature are usually found in the private sector.
Dismissal from service
If it so happens that you are dismissed from service, you will lose all retirement benefits. Dismissal is either due to misconduct or
In cases of retrenchment, you may not enjoy any retirement benefits. But you are given compensation or offered Voluntary Separation Scheme (VSS.) If there is none, you can lodge a complaint with the labour office.
In mergers and acquisitions, the new entity may retrench certain employees based on the ground of them being in excess of the needs of the new entity. The employees are entitled to compensation.
In restructuring, the collective bargaining agreement may specify that the organization cannot retrench any employee. But VSS may still come into play after negotiation.
Some organizations including government agencies have a common retirement age. Upon reaching compulsory retirement age, the employee's service comes to an end.
When people retire, loss of valuable talent may happen. This is one of the acceptable reasons for extending the service of certain employees after retiring. This is usually on a year to year arrangement. Here, the extension of service is justified.
But the time will come when the re-engaged employee may overstay beyond his or her usefulness.
Younger employees also resent this arrangement as the re-engaged employees hinder their career progression. In addition, fresh graduates have less opportunities in getting employed.
Employers need to re-employ retired employee on a fixed term contract. Refrain from the temptation of extending the service for a period longer than necessary.
Efficient management of staff retirement matters
In all matters relating to cases of compulsory retirement and early retirement, prompt action on the part of HR is a must. HR needs to act according to an approved plan or schedule of retiring employees.
Finalize everything long before the last day of the retiring employee. Failure to do so will lead to problems and hardship to the employee concerned.
Make it a management practice to pay the employee his / her last pay and the retirement benefits upon retirement. Help lessen the hardship of ex-employee by giving within a reasonable time what are due to him or her.