© - ATH all rights reserved - Edition 2024 74 EMPLOYER’S GUIDE 2024 RETIREMENT OR PENSIONING OFF 36 What you need to know : Employment contracts are not automatically terminated when an employee reaches retirement age. However, they can be terminated by the employer (pensioning-off) or the employee (retirement). The conditions and consequences of these two types of termination are different. PRINCIPLE OF PENSIONING-OFF Pensioning-off is initiated by the employer. It is only possible if the employee has reached the age from which he/she can automatically claim a full-rate retirement pension (namely age 67). The employee can request a deferment until he/she is 70. Pensioning off a protected employee requires the authorisation of the employment inspectorate. THE PENSIONING-OFF PROCEDURE Three months before the day on which the employee meets the age condition for benefiting from a full-rate retirement pension, the employer must ask the employee in writing whether he/she intends to leave the company voluntarily to receive his/her old age pension. If the employee replies within one month stating that he/she does not intend to retire, the employer cannot pension off this employee during the year after the date of his/her birthday. This procedure will be repeated every year until the employee’s 69th birthday. From the age of 70, the employer will have the option to pension off the employee without said employee being able to oppose this. When the employer pensions off an employee, it must provide the notice required for redundancy or, if it is more favourable, the notice stipulated by the collective agreement. If the pensioning off conditions are not fulfilled, the termination is classed as unfair dismissal. COST OF PENSIONING-OFF When the employer pensions off an employee, it must pay said employee a payment equivalent to : • The statutory severance pay : 1/4 of a month per year oflength of service for the first 10 years, plus 1/3 of a month per year for the following years ; or • If more favourable, the payment stipulated by the collective agreement or the employment contract. The pensioning-off payment is exempt from social security contributions and income tax up to a certain limit. But the employer must make a contribution to URSSAF equal to 30 % of sums exempt from contributions.
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