Termination at state pension age
The law offers the possibility to terminate the employment contract with the employee who reaches the age of state pension on that ground. This option of termination is subject to a notice period of one month. It will often be the case that the employment contract ends automatically (by operation of law) when the agreed retirement age is reached. In that case, the employer does not have to give notice. These arrangements can be made in the employment contract, but also, for example, in the collective bargaining agreement.
The employee whose employment contract ends by reaching the state pension age (or any other age agreed for that purpose) is not entitled to a transition allowance.
Difference between state pension and retirement age
The age agreed upon by employer and employee for termination should be accurately determined. For example, there may be a difference between the state pension age - which is set by law - and the retirement age - which is agreed upon in the employment or pension agreement.
Arrangements for employment contract after state pension age
Of course, an employer and employee cannot terminate the employment contract after reaching the state pension age and let it continue. The parties can also enter into a new employment contract after terminating the employment contract after the state pension age.
This can, of course, also be done with employees who were employed by another company before the state pension age. A number of specific regulations apply to this employment contract.
1. Chain Arrangement
First, an exception to the so-called chain rule applies. The chain only starts to run from the first employment contract concluded after reaching the age of AOW. A maximum of six temporary employment contracts may then be concluded in a period of 48 months.
2. Continued pay and sick leave dismissal
If a worker entitled to a state pension becomes disabled, the employer must continue to pay wages for a maximum of six weeks. After these six weeks, the ban on notice during illness ends and the employer can terminate the employee's employment contract for long-term disability.
The employer can request a dismissal permit from the UWV for this purpose. He must demonstrate that recovery of the employee within six weeks after the decision on the dismissal request is not expected and the employee cannot perform his work in modified form. The employer must also investigate whether the employee can be redeployed within the organization within one month. The employer can prove this with a current opinion from the company doctor.
3. Social contributions and insurance
The employer no longer pays premiums on behalf of the employee for the:
- Unemployment Act (WW);
- Sickness Act (ZW);
- Disability Insurance Act (WAO);
- Work and Income according to Labour Capacity Act (WIA); and
- General Old Age Security Act (AOW).
As a result, the employee is also no longer insured against unemployment or disability. In some cases, the employee is still entitled to sickness benefit. For example, if the labor contract ends during the employee's illness. The costs of the Sickness Benefits Act are recovered from the employer by the UWV.
4. Retirement
Whether an employee can still accrue pension after the state pension age depends on the agreements with the pension administrator.
5. Notice period and transition compensation
The employer is subject to a one-month notice period when the employee reaches the state pension age, regardless of the employee's seniority. The employer does not owe a transition fee after the end of an employment contract after reaching the state pension age.
Conclusion
The employer can terminate the employment contract with the employee who has reached the state pension or retirement age to the extent necessary. This is subject to a short notice period and the transition fee does not have to be paid.
The employment contract concluded with an employee who has already reached the state pension age is subject to some legal exceptions. There is a more extensive chain arrangement, a shorter obligation to continue payment of wages during illness, and the employer no longer has to pay contributions for (social) insurance. Also, the employer does not owe a transition fee at the end of this employment contract.
