Retirement of an employee: What the company should do
Patrick Gordinne Perez2025-01-26T08:43:14+00:00An employee’s retirement is a key moment for both the employee and the company. It is a process that needs to be managed properly, taking into account the legal, social and human aspects. Here are the steps a company needs to take to effectively manage an employee’s retirement, from planning to confirming retirement leave.
Identifying the right moment
The first step in managing a worker’s retirement is to identify the right moment. There are several types of retirement in Spain:
- Ordinary retirement: The worker reaches the required age and years of contribution.
- Early retirement: This can be voluntary or forced, with a reduction in the pension.
- Partial retirement: The employee combines a part-time contract with the pension.
- Active retirement: The employee can continue to work and receive part of the pension.
It is essential to know the employee’s personal circumstances and employment situation in order to choose the appropriate pension mode. It is also key to analyse how retirement will impact the company.
Communicate and plan ahead
Once the type of retirement has been identified, it is important to plan ahead, which involves talking to the employee to discuss their future plans and needs. In addition, it is essential to formally notify the legal processes, ensuring that the company and the employee agree on the required timelines.
The next step is to design a clear and effective transition plan that provides for the transfer of responsibilities from the retiring employee to other team members or to the new contract. Proper planning helps avoid disruptions to operations and ensures continuity of critical tasks.
It is also important to maintain open and collaborative communication with the worker during this process, which helps to create an atmosphere of trust and mutual respect. This dialogue also allows for anticipating potential obstacles or concerns and addressing them proactively.
Finally, transparency and empathy are essential to ensure that the transition is as smooth and positive as possible.
Manage the required documentation
The next step is to ensure that all documentation is in order. As a company, you must manage:
- Company certificate: This document is necessary for the worker to be able to apply for their pension with the Social Security.
- Calculation of severance pay: It is necessary to settle holidays not taken, extra pay and other outstanding items.
- Application for cancellation of Social Security registration: The company must process the cancellation of the worker’s registration in the system once the employment relationship has ended.
- Pension plans or incentives: If the company has private pension plans or additional compensation, these must also be formalised.
Covering the job
The retirement of an employee can represent a significant loss of knowledge and experience, it is crucial to plan the transition. First, it is essential to organise internal training to transfer the retired employee’s knowledge to colleagues or new staff who will fill the vacancy.
Secondly, it should be assessed whether it is necessary to proceed with the recruitment of a new employee to fill the position or, on the contrary, to reorganise the responsibilities within the existing team. This will depend on the specific structure and needs of the company.
In addition, this can be an excellent opportunity to modernise and digitise the processes linked to the vacant position. Documenting the tasks and responsibilities of the position in a clear and accessible way is a key step to ensure a successful transition.
It is important to ensure that the new processes or structures resulting from this transition are in line with the company’s strategic objectives.
Fiscal and legal aspects
Retirement also has tax and legal implications for the company. Some points to consider include ensuring that any severance payments or incentives offered to the employee are correctly calculated and paid as required by law.
In addition, companies may be eligible for certain bonuses if they hire a replacement for the retired worker. This can represent a significant saving in labour costs and encourage the integration of new talent into the team.
Regulatory compliance is another key issue. The company must ensure that all retirement-related procedures comply with current labour legislation to avoid potential sanctions or legal disputes.
Asesoría Orihuela Costa: Your ally in the management of retirement pensions
Managing the retirement of a worker may seem like a complicated process, but you can count on the help you need. At Asesoría Orihuela Costa we are experts in helping companies to comply with all the legal, fiscal and labour requirements related to the retirement of their employees.
We take care of:
- Social Security formalities: From the worker’s leave to the documentation for the pension.
- Calculation of severance and compensation payments: Ensuring that everything is done correctly.
- Personalised advice: We analyse the needs of your company and the employee to offer the best solution.
- Continuous support: We accompany you through every step of the process so that everything is agile and efficient.