What do you need to know when an employee is looking to retire?

Retirement is whereby an employee withdraws from the position or occupation and active working life. Retirement is where an employee no longer has to have any worries or stress about work, they are going to kick their feet up, relax and binge watch Netflix.

But wait, you have an employee that has not made plans to retire?!

How times have changed, employers are no longer able to force an employee to retire.

Can I make my employee retire?

In short, no.

Employers are no longer allowed to direct employees to retire, this is illegal in all states and territories in Australia.

You cannot suggest, force or tell someone that they need to retire. You cannot treat them in a way that forces them to retire, your employee could then have an unfair dismissal claim against you.

If you are noticing that an employee’s performance is declining, you are able to begin performance management techniques.

An older employee has the right to request flexible work arrangements. This can be to request things such as phased retirement or even flexible hours. Under the Fair Work Act 2009 (Commonwealth), many workers over 55 can ask their employer for a change in working arrangements. Employers may only refuse on reasonable business grounds.

Reasonable business grounds as per the Fair Work Act 2009 may include:

• the requested arrangements are too costly
• other employees’ working arrangements can’t be changed to accommodate the request
• it’s impractical to change other employees’ working arrangements or hire new employees to accommodate the request
• the request would result in a significant loss of productivity or have a significant negative impact on customer service.

My Employee is a knowledge silo, how do I begin succession planning?

To be in front of the 8-ball a good business will have a plan in place, whereby the skills of the employee will have begun to be passed on in the form of procedure manuals for example.

Check out our Emerging Leaders Program! This program is ideal for those who are waiting to be developed into great leaders.

The employee has been with you for years and has informed you of their plans to retire. In this instance, you would begin a succession plan.

It is recommended that as soon as you have been made aware of the employee’s plan to retire, you should begin the recruitment process. You have found a viable candidate and offer them the position.

An in-depth on-the-job training should commence whereby the retiring employee has ample time and opportunity to teach and pass down all of the information they have learned throughout their years with the company.

What do I do next?

Once you have trained the new employee, you will prepare to say goodbye to the retiring employee.

To do this you should create a checklist that will ensure that you have everything you need from the employee, and the employee has everything they need from you.

Don’t forget to make their send-off special and something to remember! After all, your business will be the last company this employee will ever work, and impressions last!

You will conduct the same processes as you would with any other exiting employee including final wages sending payment summary and retaining all necessary records. You will payout the employee all of their entitlements and make sure all super contributions are paid. Most awards or enterprise agreements do not provide for extra benefits on retirement but it is always worth checking before terminating the employee on the payroll system.

Here at Key Business Advisors, we know all about retirement. If you have any questions at all about this topic or have a general HR/Payroll question, call us now!

Please feel free to contact one of our team members on 1300 4 ADVICE

Stephanie Tasios

HR & Payroll Advisor

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