Frequently, the situation arises that a worker close to retirement age wishes to stop rendering their services as soon as possible. That is, bring the end of your professional career to a time before reaching the age that allows you to retire. And the truth is that it is not difficult for there to be a meeting point between this desire and those of the company. The latter, when experiencing economic difficulties, as is common in these times, tends to seek formulas to reduce the cost linked to the workers’ salary.
Elvira Cano and Jesús Vidán, labor lawyers at LABE Abogados, address the formula how companies encourage the transition to the situation of “early retirement” of workers near retirement.
What we must understand by early retirement
Although it is a widely extended concept in popular language, the truth is that the Law does not recognize the existence of early retirement since 1998. Today, we must understand by early retirement the situation, in fact and in law, in which A worker remains by reason of his age, close to retirement, from the moment his employment contract expires until he receives a retirement pension from the Social Security system, either early or ordinary. In other words, it is the bridging situation that links the definitive cessation of a worker’s work activity with access to retirement.
In a pre-retirement situation, for example, the worker who leaves his company voluntarily or involuntarily at the age of 61 years remains, until the moment he can access the retirement pension in any of its forms. During this period, if you comply with the legally established requirements, you can take advantage of the unemployment benefit and / or the subsidy for people over 52 years of age.
Incentive leave plan
A common mechanism to encourage access to early retirement and, at the same time, reduce salary costs, is the use of incentive leave plans. Notorious have been those implemented by Airbus, Banco Sabadell or El Corte Inglés (up to 4,000 employees have taken advantage of the latter) during 2020, thus giving a good account of the progressive standardization of this template readjustment formula. Not in vain, the incentive leave plan is conceived as an alternative used in the negotiation of collective dismissals to mitigate the incidence of this collective measure.
The end of the incentive leave plan is to implement the voluntary termination of work on a compensated basis. In other words, the company facilitates the voluntary departure of the worker in exchange for a series of economic and contribution benefits.
Generally, the company usually recognizes an indemnity (not exempt) aimed at compensating a part of the salary that the worker will stop receiving until reaching retirement age. In the same spirit, the recognition of an income plan for workers who take advantage of the incentive leave is also frequent; usually until the date they can access voluntary early retirement.
Finally, in order to avoid a reduction in the regulatory base of the retirement pension, the subscription, by the company, of a special Agreement in the Social Security system that allows the worker’s contributions to be sustained is essential. The acceptance of this type of agreements or plans constitutes the most natural formula to encourage early retirement from the company.
From ERE or objective dismissal to early retirement
There are situations in which the termination of the employment contract does not depend on the freely adopted agreement between the company and the workers, but responds to the economic, technical, organizational or production circumstances that operate in the corporation. We speak in this case of contract terminations that occur as a result of an objective dismissal or of a Record of employment regulation (collective character), when they affect workers who are close to retirement age.
In these cases, the worker who is the subject of the dismissal will have the right to compensation (exempt) of twenty days of daily salary for each year worked, with a maximum of twelve monthly payments. Likewise, article 51.9 of the Workers’ Statute establishes that in the collective dismissals of companies that are not involved in bankruptcy proceedings, which include workers with fifty-five years of age or more, there will be an obligation to pay the fees destined to the financing of an Agreement special in the Social Security system.
In these cases, in which the worker can take advantage of early retirement due to non-voluntary termination of work (more favorable than voluntary early retirement), it is common for the pre-retirement path to go through unemployment benefit and / or subsidy for people over 52 years of age, until reaching the age to retire early or ordinarily.
LABE Lawyers is a 360º firm that has experts in labor and human resource management advice. From this prestigious office, headquartered at Paseo de la Castellana 30, it warns of the need to have experts to guide workers and firms from all sectors in the matter.
Elvira Cano and Jesús Vidán are labor lawyers at LABE Abogados.