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Ranju_9666 (Service)     10 September 2009

Reduction of Retirement Age by employer


For the last 16 years or more, I have been working in a Public Limited Co., where I had joined as a "Covenanted Staff" (or Officer) Grade. At that time all officers (headcount of 800) were given a "Staff Regulatons Book for Covenanted Staff" where among all clauses, the Retirement Age for an Officer was given as 60 years. Our total employee strength is about 18000, out of which Officers comprise a strength of 800 and the rest are Non-Covenanted Staff & Workmen. The Retirement age for the rest of the employees is 60 years.
All our Officers are members of an "Association", which is an independent registered forum, whose primary objective is to look after the interests of the Officers of our Company. Though the Company has never officially recognised our Association, but over the years, they have engaged in dialogues with the Association regarding settlement of issues of Officers.
About 5-6 years back, when our Company was going through a bad patch, business-wise, it had floated a VRS scheme for all employees among other measures that it had taken for bailing itself out from the then financial crisis. About 2000 employees, from the non-covenanted and workmen category had opted for the VRS at that time. At the same time, Company had made a tacit understanding with our Association that in place of VRS of Officers, the Retirement Age of Officers shall be reduced to 58 years. Though the Scheme was officially "Voluntary", our Association had acquiesced to this proposal for the sake of its members.
However, no such directive from the Company, was formally sent to individual officers and the issue remained ambiguous.
Recently, about 2 weeks back, the Company has sent a revised “Covenanted Staff Regulations Book” where it has  been indicated that the Retirerment Age of Officers is 58 years.  This is inspite the fact, that the rest 16000 employees have their retirement age pegged at 60 years.
I would like to know, whether our Assocation or Individual members have any grounds for contesting this Revised regulations and if so on what basis.


 6 Replies

R.R. KRISHNAA (Legal Manager)     10 September 2009

The company has all rights to modify the retirement age of persons depending upon the changing circumstances and other necessary factors.  The employees cannot insist or compel that the retirement age should be only 60 years.  The company has taken this decision in the interest of the affairs of the company as it is passing through a difficult phase of progress.  Employees cannot question this issue because company has taken such decision in the interests of the company’s survival.   



Interests and survival of the company is paramount that any other factor.  



There are innumerable judgments on this issue to hold that company has powers to modify the rules of retirement in order to suit the needs of the changing circumstances, demands and interests of the company.  


Ranju_9666 (Service)     10 September 2009

But can the Company do such a thing selectively, i.e for only 5% of its employees, whereas the change does not affect 95% of its employees?


Ranju_9666 (Service)     10 September 2009

Then again, the Company's present financial position has turned around since the last 3 years and is totally in the green. Hence the question of the Company being in a financial crisis at the present times does not arise at all


R.R. KRISHNAA (Legal Manager)     10 September 2009

Regarding your first querry, I like to say that a company has powers to do selectively provided it shows good reasons for the same.   If there are no good reasons for doing selectively, then you can challenge the same before the court. 


Regarding your second querry, I can say that financial crisis alone need not be a ground for the company to modify the retirement rules.  There may be other vital and necessary factors which may influence and lead to such decision.  The company has the right to show necessary factor.   But if the reason or factor is not important or vital then you have the right to challenge the same.  It all depends on the reasons given by the company, that your challenge will lie or not before the court.

Ranju_9666 (Service)     10 September 2009

Thanks for the advice.

Sudhir Kumar, Advocate (Advocate)     22 October 2014

the existing conditions of service cannot be chanaged. The company may not have reduced age of workman to avoid labour litigation. please also check whether this resolution has been registered. Meet the nearest available labour matter lawyer with all papers.

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