On retirement — additional employment benefits?

Q&A

On retirement — additional employment benefits?

An employee’s voluntary retirement is strictly a resignation, but are there any additional employment benefits arising when employees indicate they are retiring from the workforce?

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An employee’s voluntary retirement is strictly a resignation, but are there any additional employment benefits arising when employees indicate they are retiring from the workforce?

This question was recently sent to WorkplaceInfo.

We have an award/agreement-free employee who has indicated to their immediate manager a wish to retire, because they will be turning 65 next month and will be eligible for an age pension.

The employee has been employed with us for approximately eight years and is employed in our Canberra office.

Although the employee is resigning, does the reason for resignation in this case (ie retirement) mean the employee is entitled to other payments on termination of employment?

We also have offices located in a number of states and territories.

A  As a general rule, ‘retirement’ does not, of itself, provide any additional entitlements to an employee on termination of employment.

Most industrial instruments and the provisions of the National Employment Standards (NES) do not regard an employee’s ‘retirement’ as a specific reason to provide any additional employment entitlements under the employee’s contract of employment.

Pro rata long service leave?
 
An exception to this may be pro rata long service leave, which, in some jurisdictions, does provide payment of pro rata long service leave when an employee reaches ‘retirement age’.

This is the case under the relevant long service leave legislation in the Australian Capital Territory, Tasmania and Northern Territory. In this case, because the employee is located in Canberra, there would be an entitlement to pro rata long service leave on retirement, under the ACT legislation.

Other jurisdictions may provide pro rata long service leave on termination of employment, subject to the relevant qualifying period of service, regardless of the reason for terminating the employment (except perhaps serious misconduct). For example, the relevant Victorian long service leave legislation provides that an employee with at least seven years of continuous service with the employer is entitled to pro rata long service leave on termination, regardless of the reason for terminating the employment.

It should be noted that in most jurisdictions, as soon as an employee’s period of service with the employer entitles an employee to take long service leave (usually after 10 years or more of completed service), payment of accrued long service leave on termination is usually payable regardless of the circumstances relating to the termination.

An employee will usually have an entitlement to pro rata long service leave, subject to having completed the relevant qualifying period of service, where the reason for the employee’s resignation is due to ‘ill-health’ or ‘incapacity’.

Source: Paul Munro, IR Consultant.
 
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