For Companies Interested in Hiring Retirees: Pay Attention To This!
Having exemplary employees who contribute positively to the company is the dream of every company. However, these employees are not always able to continue to give their best abilities, especially as they get older and they are hindered by the retirement age. A person who has entered retirement age is someone who is no longer working due to old age and/or is dismissed by the company on the basis of having reached retirement age.
However, there are companies willing to recruit retirees to be part of the company, on the grounds that retirees have knowledge and experience that can still be given as a positive contribution to the Company, either by working or by transferring knowledge to the younger employees. What are the legal consequences of this?
From the perspective of the positive law in Indonesia, there are no laws and regulations that explicitly prohibit companies from employing their employees who have reached retirement age. In the event that the employee still has the ability to carry out his/her work, then there is no prohibition for the company to employ or re-employ employees who have reached the retirement age.
Types of Work and Employment Agreements for Retired Employees
It should be noted that employees who have reached retirement age are certainly not young anymore. So, it is important for the company to consider the types of work that can be done according to the ability and age of the employee. Of course, jobs that require very high physical abilities are not the ideal type of work for retired employees.
Thus, the company also needs to consider the type of work agreement that is more appropriate to be used as the legal basis for the employment relationship between the company and retired employees. There is no prohibition for companies to hire on the basis of an Indefinite Work Agreement (PKWTT) or as permanent employees. However, considering the age of employees who are not young anymore, a Specific Time Work Agreement (PKWT) can also be an option, especially if the desired job of a retirement age employee is something that can be completed within a certain period of time, such as transfer of knowledge.
Based on Government Regulation Number 35 Of 2021 On Temporary Employment Agreement, Outsourcing, Working Hours And Breaks And Termination Of Employment Relationships (GR 35/2021), There are two types of PKWT, namely:
- PKWT based on period of time, for:
- work that is estimated to be completed in not too long a time;
- seasonal work; or
- work that is in relation to new products, new activities, or additional products that are still in an experimental or a try-out phase.
- PKWT based on completion of a certain work, for:
- work that is completed at once; or
- work that is temporary in nature.
Meanwhile, if the PKWT period for retired employees ends, and both the company and the employees agree to continue the working relationship, the PKWT may be extended, in accordance with the provisions in GR 35/2021.
Working Hours of Retired Employees
Still related to the considerations that need to be taken regarding the physical condition of retired employees, it is also necessary to pay attention to the provisions regarding working hours that have been stipulated in Article 21 paragraph (2) GR 35/2021, namely:
- Working Hour as referred to in paragraph (1) shall consist of:
- seven hours in one day and 40 hours in one week for six business days in one week; or
- eight hours in one day and 40 hours in one week for five business days in one week.
Seeing the working time, PKWT for retired employees can be done with a Daily Employment Agreement. Daily Employment Agreement can be made provided that the Worker/Laborer works less than 21 days in one month. In the event that the Worker/Laborer works 21 days or more for three consecutive months or more, the Daily Employment Agreement becomes invalid and the Employment Relationship between the Employer and the Worker/Laborer changes by law based on the PKWTT.
Retired employees will get all the same rights as other employees with the same type of employment agreement. In the event that PKWT with retired employees is discontinued, the Company is required to provide compensation to retired employees with PKWT who have worked for at least 1 month which will be given at the end of the contract.
Employees Who Have Obtained Retirement Rights, But Continue To Work At The Previous Company
In certain cases, the company wants its employees who have reached retirement age to continue working relationships, for various purposes, one of which is to ensure a good transfer of knowledge to younger employees. In the event that the employee agrees to continue his employment relationship even though he has reached retirement age, this can be agreed upon by the parties, and the employment relationship continues.
As for reaching retirement age, employees have the right to receive their pension rights, which must be provided by the company or other agencies involved, such as the Pension Guarantee. Based on the Supreme Court Circular No. 5 of 2021, in the event that there will be termination of employment for an employee of retirement age who has obtained his pension rights, the employee is only entitled to a period of service award since re-employment in accordance with the provisions of the legislation.
The employment element is an important aspect in running a company. Oftentimes, due to negligence or not focusing on managing the workforce, companies end up having to spend money and energy when industrial relations disputes finally arise.
Don’t let your company be one of them. Consult the legal aspects of employment with us, so that you can focus on doing business, you can contact us at 082112341235 or ask@bplawyers.co.id.