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25Aug

Rehiring of the worker who has taken advantage of his old-age pension

Rehiring of personnel who already have an old-age pension

The fact that the worker has complied with the requirements to enjoy his old-age pension and decides to avail himself of that right is a cause for termination of the employment contract. However, it is essential to clarify that said decision has different effects than dismissal or resignation.

In this regard, subsection E) of ordinal 85 of the Labor Code establishes as a cause for termination of the contract without liability for the worker and without the rights of the worker to payment of benefits and compensation being extinguished:

When the worker avails himself of retirement, old age pension, death, or retirement benefits, granted by the Costa Rican Social Security Fund, or by the various pension systems of the State Powers, by the Supreme Electoral Court, by autonomous, semi-autonomous institutions, and municipalities.

Therefore, upon the termination of the employment contract of the personnel who avail themselves of their old-age pension, the employer must pay the worker: christmas bonus proportional to the corresponding period worked ("aguinaldo"), pending vacations, severance pay (under the provisions of article 29 of the Labor Code) and the salary until the last day worked. However, it is essential to clarify that the employer is not obligated to pay the notice since the termination of the contract is not attributable to him.

However, suppose the person who took advantage of an old-age pension decides to continue with his professional life, either with his old employer or with a new one. In that case, he may do so without prejudice to his right to the pension that he currently enjoys.

The first observation that should be made regarding this issue is the prohibition of employers from applying age filters in selection processes, which could be considered discriminatory, following article 404 of the Labor Code.

All discrimination at work is prohibited for reasons of age, ethnicity, sex, religion, race, sexual orientation, marital status, political opinion, national origin, social origin, affiliation, health condition, disability, union membership, economic situation, or any other analogous form of discrimination.

Even the Labor Code, in its numeral 407, is more specific on this issue in terms of the selection processes: "Employers are prohibited from discriminating based on age when requesting a service or selecting a worker."

In this sense, it is essential to remember that, in general, a hard-working person who has already met the requirements to benefit from an old-age pension has great experience and can make valuable contributions to an organization.

Regarding the form of contracting, it should be clarified that the Regulations for the Disability, Old-Age, and Death Insurance of the Costa Rican Social Security Fund provides the possibility for people to continue their professional life, either as employees or as independent contractors, once they have taken advantage of their old-age pension:

The old-age pensioner may dedicate himself to salaried work in the private sector, as an independent worker, or even part-time in university teaching in the public sector. If the pensioner works as indicated in the previous paragraph, he must contribute only to the Health Insurance. If the old-age pensioner works in the public sector in fields other than university teaching, he must request the suspension of the pension for the period he works and contributes both to the Health Insurance and the Disability Insurance, Old Age, and Death. Finally, if the old-age pensioner dedicates himself to university teaching for more than half-time, he must request the suspension of the pension for the period he works and contribute only to Health Insurance. (Article 22, Regulation of the Old Age Disability and Death Insurance of the Costa Rican Social Security Fund).

The way in which these people can eventually maintain a link with the company, either as employees or as independent contractors, must be agreed upon by mutual agreement taking into account the characteristics of the intended service.

Broadly speaking, and without omitting the fact that each situation must be analyzed individually, if there is going to be subordination over the worker, that is, if he is going to remain under the immediate direction of a boss, it would be appropriate for him to continue as a salaried worker. But, on the other hand, if the functions that he will carry out are typical of an independent professional, a contract for professional services could be signed.

As for social security charges, the situation tends to be a little different for those who have already taken advantage of an old-age pension, since contributions are made to the Costa Rican Social Security Fund during professional life, including contributions to the Regime for Disability, Old Age and Death (IVM) and to the Sickness and Maternity Insurance. However, as they are people who already enjoy a pension, they will only be obliged to make the corresponding contributions to the Sickness and Maternity Insurance.

At Bufete Godínez y Asociados, we specialize in counseling and advising employers in labor and employment law. If you need any additional information, do not hesitate to contact us by clicking here.

 

About the Autor

Jairo José  Cerdas

Jairo José Cerdas

Attorney
Email: [email protected]
Phones +506 2289-5052 | +506 2282-2164 | +506 2289-5275
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