An employee informed us that he was would be retiring within one year.  The manager of the department had at numerous times asked the employee to stay longer, as a matter of fact the manager told the employee he could stay as long as he wanted.  The employee agreed to stay at least an additional year or until 2010. 

In January of 2009 the manager asked the employee when he was leaving.  The employee explained that he was planning on leaving in 2010. The manager forgot that he had asked him to stay as long as he wanted to stay, and complained that he hadn't budgeted for the retiring employee to stay that long.  Of course the retiring employee was confused and concerned.  He went to the Director of the department about this miscommunication.

 The three of them met, and as a result of the manager's mess up, the retiring employee agreed to leave earlier than expected, and handed in his resgination letter.  Anyhow, the retired employee has applied for unemployment benefits because his early retirement was a direct result of the manager and therefore the company.

Should we contest?

HRConcerned

No I don't think you should contest this.  There seems to be a lot of miscommunication here and I think in this case, not contesting and allowing the employee to get the unemployment is a small price to pay for this.  The employee could have said "No I want to stay" and the company could have been in a much bigger pickle then it is right now. 

Not only do I think you should not contest this, I think you should go out of your way to ensure that this retiree has no reason to get really upset with the company for at least 2 or 3 years.

When the manager says "you can stay as long as you like" - that's a promise of continual employment and such off-hand remarks have landed companies in pretty hot water before.  When you make a promise of continued employment but then later pressure someone to retire early, it begs the question, "why did you try to make this person go, and not simply lay someone else off or fire someone with a performance problem?"  Naturally, such questions raise the specter of ADEA concerns.