I'm asking about companies'/managers' reasoning in general, rather than about the policy of a specific company. This is something I've come across a number of times, in/about various different companies.
Typically where the work being done by a particular 'role' is no longer needed, ceases to exist etc then the role/employee holding the role would be laid off / made redundant.
However... several times I've observed companies where an employee at the older end (e.g. age 60+) is in a role that would normally be laid off / redundant (legitimately, i.e. that role is no longer needed in the company and the person wouldn't be replaced) but the decision makers at the company opt to "wait for the person to retire" rather than lay them off.
The longest time period I've seen this happen over was about 5 years! (i.e. the person was 5 years from retirement but their position was already obviously no longer needed, due to changes in the company (mergers and acquisitions, 'synergies', etc).
- There were several rounds of layoffs where numerous other people ended up leaving the company, but this person was not, surviving several rounds of layoffs, even though it was apparent to everyone that their role wasn't actually needed any more. (Not very good for motivation for those left behind!)
- When the person eventually retired, they indeed were not replaced. There wasn't even any need for handover of any tasks (as the person wasn't completing any at that point).
- (Edited to add, from discussion in the comments) There were several reasons the role was (in my view) obsolete, including: duplication of workload with the (acquiring) parent company; obvious lack of day-to-day tasks; my previous experience of seeing similar roles laid off; a "re-structuring" that preserved this role (and this one only) as an "exception" with no justification; job title/responsibilities had no bearing on actual responsibilities e.g. a "purchasing manager" who didn't have any purchasing workload.
My background is the UK, but this may apply to other countries as well.
Question: Why would the decision makers at a company "wait for the person to retire" rather than lay them off?
Things I've considered:
- cheaper to continue paying their salary than severance payments? (but unlikely unless they have very long service and exceptionally generous contracts) - e.g. their salary may be another £30,000 (for example) * 2 years plus overhead for employers costs which could easily be nearly £100,000 - I'm sure almost no severance payments are that high!
- compassion for the employee who would then struggle to find another job 2 (or so) years before retirement?
- what about the effect on morale of the remaining staff members, who have seen colleagues laid off or lost their own jobs, when the company seems to be 'carrying' someone who is ostensibly not contributing anything.
- I'm confused because layoffs are supposed to be about "the role", rather than "the specific person holding the role".
- (edited to add:) perceived age discrimination? Laying off someone because they are 'older'? (but surely easy to disprove based on the facts about their actual responsibilities etc?)
In case it matters: my experience is mostly with "medium size" companies e.g. 50-200 people, the parent company mentioned above had over 1000 people.