Retirement from work can provide individuals with the opportunity to seek new directions and new challenges; however, when your employee retires for you as an employer; it can present a set of challenges as you begin to prepare for their departure. To help you along, we have outlined the five activities you need to undertake, ensuring a smooth transition for you and the retiree.
Some organisations have a mandatory retirement age set by the company but may also have provisions for earlier retirement generally and on the grounds of illness. Therefore, if you know an employee is approaching this milestone, it’s worth starting a dialogue about the process and transition that will happen. Most of the time, employees are happy to talk about their upcoming retirement with you early on, for example, one or two years before they intend to leave.
Handling the Payroll
If your employee retires, you do not need to notify Revenue that their employment has ended if you are paying a pension to them and have the same registration number for current and pensioned employees. The pension, however, should be included on the next payroll submission, and tax and USC must continue to be deducted or refunded though there may be a change to the PRSI class used.
However, your employee might retire on a pension that is paid by you but with a separate registration number or a trust fund or life assurance company. If this is the case, you must notify Revenue by including the cessation date on the payroll submission as standard after your employee leaves. Either way, thorough records should be kept in your HR Management System for future reference on their situation.
Hold an Exit Interview
Retiring employees should take part in an exit interview if this is something you do with all employees who leave the company. Though the reason for leaving is not likely to be contentious, you should still take the opportunity to learn about your organisation, find room for improvement and listen to their general feedback.
Transfer the Knowledge
A knowledge transfer from a retiree takes time and effort, so should not be left until the last minute. There are several ways that you can undertake a knowledge transfer such as mentorship, job sharing or job shadowing. Either way is essential to have your retiring employee share the knowledge behind what they do and the way they do it as well as identifying those processes that are critical to the business and essential details.
Plan a Farewell
If you know your employee well, you will know how the individual will react to an event planned to recognise their retirement. Lastly, a note of caution about parting gifts. Be cautious with any gifts or cards which may be offensive to the employee if it uses their age or their retirement to poke fun.
Handling the retirement process can be a sensitive issue, so if you are unsure how to approach it, always go back to the human element and the employee’s feelings. Remember, you are touching on this individual’s livelihood, their identity and the years of their lives spent working hard, so always proceed with kindness and respect.