Hiring an employee who has already reached state pension age can save you, as an employer, a considerable amount in employer’s contributions. For this group of employees, for example, you are not required to pay employee insurance contributions. You can offer six fixed-term contracts with a combined duration of up to four years. In the event of illness, the reintegration obligations are less stringent; no contributions need to be paid towards a pension scheme; and, in the event of illness, you are only required to continue paying wages for 13 weeks.
This final condition will be amended with effect from 1 July 2023. From that date, in the event of illness of an AOW employee, continued payment of wages will apply for 6 weeks rather than 13 weeks.
Please note that a transitional arrangement is in place, under which employees covered by the AOW who were already off sick before 1 July 2023 are still entitled to 13 weeks’ continued pay. For cases of sickness occurring after 1 July 2023, the new 6-week period applies.
If you are planning to take on an employee who is receiving a state pension, we can assist you in drawing up the employment contract.