1. Overview

A pre-retirement contract allows the University and a continuing employee to agree that the employee will give up their status as a continuing employee and enter into a fixed-term contract prior to the employee’s retirement. The employee’s employment with the University ends on the expiration of the contract.

The University will only offer and approve a pre-retirement contract with an additional salary loading in exceptional circumstances whereby the cost of the pre-retirement contract is offset by a resulting benefit or gain to the University. The offer of a pre-retirement contract must form part of a wider strategic or operational objective of the University (for example, managing workforce planning).

2. Salary loading for staff on a pre-retirement contract

A pre-retirement contract may include a salary loading payable to the employee. The level of the salary loading will be at the discretion of the University and will be influenced by factors such as:

1. The length of the pre-retirement contract (a maximum loading of 20% is available for contracts less than 6 months from the date of signing).
2. The length of time the employee has been with UNSW.
3. The age of the employee (note – an employee who will have reached their nominal retirement age by the end of the contract will not be eligible for a pre-retirement contract).
4. Current level of leave entitlements of the employee. It is expected that any proposal for a pre-retirement contract will need to include a plan as to how additional costs arising from long service leave and annual leave entitlements will be off-set (eg through the requirement to take leave or cash out long service leave prior to entering into the contract).

3. Funding of expenses consequential to pre-retirement contracts

All elements of the pre-retirement contract additional or consequential to the contract are to be funded by the business unit of the employee. For example, the difference between the uninflated long service leave liability and the increased liability resulting from the pre-retirement contract must be funded by the business unit.

4. Negotiation and approval of pre-retirement contracts

Where circumstances are appropriate, an employee may apply for a pre-retirement contract by submitting a written proposal to their Head of School/Manager. Where the Head of School/Manager supports the request, it should be submitted to the Dean/Divisional Head for endorsement and then submitted with supporting documentation (outlined below) to the Director Human Resources for consideration in the broader University context and final approval.

An application for a pre-retirement contract will not be approved unless it is accompanied with a recommendation documenting the cost benefit that substantiates the overall saving to the University (eg. in excess of $25,000 within one year of the pre-retirement contract being approved or paid) or a recommendation establishing the real cost of the pre-retirement contract benefit and demonstrating how the expense is validated by the stated “gain”.

Employees should seek independent advice on the effect of a pre-retirement contract on their superannuation and other benefits. Such advice may be sought from the superannuation fund or from an independent financial adviser.

5. Monitoring performance of staff on pre-retirement contracts

The pre-retirement contract will include a provision stating that the level of any salary loading will be subject to ongoing satisfactory performance. An employee will be given sufficient warning if his or her performance is regarded as being below the standard required to maintain the loading at the current level.

6. Re-employment of staff on pre-retirement contacts

It is the University’s expectation that staff applying for a pre-retirement contract do so in the clear and certain knowledge that they are retiring from UNSW, and that re-employment is not contemplated. The meaning of “re-employment” includes employment on either a fixed-term or continuing basis or regular casual work. The prohibition on re-employment does not apply if staff retire normally (ie. without a pre-retirement contract that includes a salary loading).