What is a Pre Retirement Contract?
A Pre-retirement contract is a fixed term contract of employment entered into by the University with a staff member who has indicated a willingness to commit to a retirement date. The arrangement is facilitated by the conversion of the staff member’s standard appointment to a fixed term contract. If sought, and agreed to, a pre-retirement contract will supersede any pre-existing contract of employment between the University and the staff member.
Pre-retirement contracts are completely voluntary. While the University generally encourages the use of pre-retirement contracts, they are not an entitlement, and will only be offered where the University can see a benefit in terms of workforce planning.
Pre-retirement contracts are agreements between individual staff members and the University. They are negotiated privately, and on a case-by-case basis. The terms of one staff member's pre-retirement contract will not be used to set a precedent for other such contracts.
A pre-retirement contract will specify the date at which the staff member’s employment with the University will end. The contract cannot be extended or renewed beyond that date. The period of a pre-retirement contract is normally one to two years.
A pre-retirement contract can be terminated by:
- the effluxion of time – i.e. the date of expiry is reached;
- the staff member – i.e. by resignation before the date of expiry; or,
- the University – but only in cases of serious misconduct.
Staff who are eligible to be considered for a pre-retirement contract are those who:
- have standard appointments (also referred to as tenured or continuing) with the University; and
- have reached "retirement age"; or
- would reach retirement age during or at the expiry of the pre-retirement contract.
Why use Pre Retirement Contracts?
The use of pre-retirement contracts can provide benefits for both the University and its staff members.
The benefits for the staff member include:
- allowing the staff member to plan for the future by giving guaranteed employment for the contract duration (the University cannot terminate a fixed term appointment on the grounds of redundancy);
- if there is a loading, an increase in the staff member’s remuneration for the remaining period of employment, and
The benefits for the University include:
- creating certainty for planning purposes by knowing when a staff member will retire;
- where an area is planning to restructure or change its strategic direction, often voluntary departures through pre-retirement contracts can be less traumatic for all staff than alternatives such as redundancies; and
- enabling career opportunities to open up for more junior staff.
Pre Retirement Contract Loading
As mentioned above, pre-retirement, fixed term contracts have mutual advantages for the University and for the staff member.
Pre-retirement contracts may include a loading, expressed as a percentage of the staff member's gross annual salary. The loading will not be superannuable.
The size of any agreed loading will be determined having regard to the particular circumstances in which the contract is being contemplated. It would be expected to vary with contract periods of different lengths. That is, longer contracts attract lower loadings. Normally a maximum of 20% can be offered for a short-term contract. The level of any loading must be approved by the relevant delegate, Director HR, before a contract is established. Advice on levels can be obtained from Human Resources Division.
Negotiation and Approval of Pre Retirement Contracts
A staff member or the staff member's supervisor or agent can raise the possibility of a pre-retirement contract at anytime.
If the issue is raised the staff member and Delegate should discuss the following:
- whether a pre-retirement contract might be mutually beneficial to the area and the staff member;
- the length of any contract – i.e. when the staff member plans to retire and the Area’s commitments;
- any proposed loading; and
- performance expectations and whether any amount of the proposed loading is subject to the achievement of agreed outcomes.
The staff member and Delegate should ensure that these conversations are of an informal nature and will not constitute a binding agreement.
Once the staff member and Delegate have reached informal understanding on the possible terms of a pre-retirement contract, the staff member should seek independent financial and superannuation advice. At this stage the Delegate should seek approval from the Director HR. If approved, the Delegate should contact the Human Resources Division who will produce the formal contract.
A pre-retirement contract will become binding only when the staff member signs the written contract, accepting the terms of the agreement.
*The term “retirement age” in this document, and linked documents means the age established by the relevant superannuation fund as the age at which superannuation funds can be accessed. Otherwise, continuing staff of the University who are on standard (or continuing) appointments have discretion in determining their retirement date.
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