Status of an employee who has completed 60 years of age

We normally believe that 58 or 60 is the age of retirement for an employee. Retirement marks the end of a person’s working career, but retirees in recent decades have radically redefined what it means to be retired. Today, retirees are often active in a variety of areas and may even pursue part- or full-time employment after leaving behind a career of many years. An employee may plan to do work after his retirement, whether something part-time or full time to help his savings last longer; or perhaps he is not ready to step away from his current full-time job due to his personal financial liabilities.

Whatever the reason, and whatever the plan, holding a job after 60 isn’t as simple as we might imagine. Just because the employee wants to keep working, or need to keep working, doesn’t mean he will be able to get all statutory benefits which are available to normal payroll employees.

As per Industrial Employment (Standing Orders) Central Rules, 1946- SCHEDULE I-B, which deal with Model Standing Orders on additional items applicable to all industries, the age of retirement or superannuation of a workman shall be as may be agreed upon between the employer and the workman under an agreement or as specified in a settlement or award which is binding on both the workman and the employer. Where there is no such agreed age, retirement or superannuation shall be on completion of 58 years of age by the workman. Even if there is no agreement as to the retirement age, the employee may continue the employment with mutual consent of both employer and employee. In such type of employment, the employee may be paid his salary in separate pay sheet, without deducting the PF and Professional Tax and computing his income tax as per the slabs available to senior citizens etc. So, whenever an employee takes up employment after 60 years of age, the following changes shall occur to his service-life:

  1. No Contribution towards EPF– Employees beyond 60 years of age will have no Pension contribution under PF. Employees’ Provident Fund Scheme itself defines “excluded employee”. As per Para 2(f) excluded employee means an employee who having been a member of the fund has withdrawn the full amount of his accumulation in the fund on Retirement from service after attaining the age of 55 years. So, if a person beyond the age of retirement is appointed, who has already withdrawn the full amount of his accumulation, there is no need to contribute to PF. Again, as per Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 an employee working in the organized sector is entitled to get a pension after their retirement at the age of 58 years under Employees’ Pension Scheme. So, if the employee starts getting benefit of the Scheme after the age of superannuation, there is no room to contribute towards the Scheme again.
  • Profession Tax will not be deductible: In India, currently 21 states Government levy the professional tax on income from profession or employment. 19 states do not prescribe any age limit to be covered under the Professional Tax law of the state. The two states that specifically mentions age limit for application of professional tax is Gujarat and Karnataka. In Gujarat as per Section 26-A of thr Gujarat State Tax on Profession, Trades, Callings and Employments Act, 1976,  and in Karnataka, as per Section 3 of the Karnataka Tax on Profession, Trades, Callings and Employments Act, 1976;  professional tax shall not be payable by persons who have attained 65 years of age.
  • Income Tax computation will have to change: Resident senior citizens of age between 60 years and above but below 80 years is exempted from income tax if their income is below the taxable threshold of Rs. 3 lacs. For citizens of above 80 years of age, income tax is exempted if their income is below the taxable threshold of Rs. 5 lacs. For income of more than this cap, income tax shall be computed as per the computation norms prescribed by the Income Tax Act 1961.

  • ESI will continue to be paid to the employee: ESIC Scheme is made to protect the employees in the events of sickness, maternity, disablement and death due to employment injury and medical care by providing financial assistance. As it is basic need of an employee, there is nothing mentioned in the Act which excludes employees on the basis of age from the purview of the Act. So, to get the benefit of this social security Scheme, an employee may continue to contribute towards ESIC. However, ESI will not extend Extended Sickness Benefit to such employee as sickness benefit is available to an insured person till, he attains 60 years of age.
  • Gratuity shall be payable: Payment of gratuity is mandatory to an employee on termination of employment after he has rendered continuous service for not less than 5 years in a single organization. Even an employee retires from his service and get the gratuity payment, and joins employment again, he shall be eligible to receive gratuity again on completion of his stipulated term. Gratuity is calculated on the basis of length of service and not age, hence gratuity will continue to be payable.
  • Bonus shall be payable: As per the Payment of Bonus Act, 1965 bonus is to be paid to the persons employed in establishments based on their profits and productivity. The amount of bonus payable to the employee is calculated on the profit of the company. So, the employee above the age of 60 years shall also be eligible to get bonus if he fulfills other conditions of employment mentioned in the Act such as wage threshold of Rs.21,000 per month and working days for not less than 30 days in an accounting year.

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