When’s it time to ride off into the sunset?

Kerry Fredericks Werksmans

There isno specified retirementage for employeesin terms ofSA law.

Employers are, however,entitled torely ona consistent, agreed upon retirementage,whichisoften specified ineither an employee’s contract of employmentorintermsofan employer’s internal policies.

Theusual retirementage may also beestablished with reference tothe retirement benefit schemethat employeesjoinwhen theytakeup employment withtheir employer.Ifthe rulesofthe schemestipulatearetirement age, this mayalso set the retirement agefor the employer’s workplace.

In practice, determining and enforcingthe workplace retirement ageusually involves consideringtwo sources oflegal rightsand protections affordedto employees.

Thefirst arisesfrom section 187(1)(f) ofthe Labour Relations Act No66 of 1995 (LRA), whichspecifies that where an employee has been dismissedonthe basisofage alone, such dismissal is considered automatically unfair andcarries,interalia,apossible maximum compensation award equivalentto 24 months’ remuneration.

Section187(2)(b) ofthe LRA, however, statesthat a dismissal based onage is fair if theemployee hasreached the normal oragreed retirement agefor persons employed in that capacity.

Notwithstanding section 187(2)(b),our courtshavehad todetermine thequestionof whether ornot thetermination of anemployee on the written agreementbetween the parties. The question whicharises inthesecircumstances is: can an employer anytimethereafter terminate such an employee’semploymentonthebasis that the employee has reached the agreed retirement age. In other words, does the employerlose the right to terminatebased on retirementagebyfailingtodo so on theemployee’s attainment of retirement age.

The LabourAppeal Court dealt with boththese issues in the caseof Motor Industry Staff Association and Another vGreat SouthAutobodyCC t/a GreatSouth PanelBeaters (JA68/2021) [2022]ZALAC basis thatthey havereached retirement age constitutes an automatically unfair dismissalfor thepurposesof section 187(1)(f) of the LRA.

103.

The second,practical issue arises when an employee who has reached and surpassed the agreed retirementageispermittedto continue working without the conclusion of any further

In theGreat SouthCase, the employee and employer entered into a written employment agreement which, among other things, provided that the employee’s retirement agewould be60 years of age.On March 15 2018, the employee turned 60. However, the employer did notterminate hiscontract of employment and allowed him to continue working.

On January14 2019,the employer informedthe employee that his services would terminate with effect from February 12 2019 as he had reached the agreed retirementage of60. Atthis time,ninemonthshadpassed since the employee turned 60.Theemployeereferredan automatically unfair dismissal disputeto theLabour Court in termsof section 187(1)(f) of the LRA. The LabourCourt dismissed the dispute and the employee subsequently appealed to the Labour Appeal Court.

The LabourAppeal Court upheld the Labour Court’s decision and found that:

● In terms of section 187(2)(b) ofthe LRA,an employer has the right to dismiss an employee who has reachedtheagreedornormal retirement age. This right accrues toboth theemployer and employeeimmediately after the employee’s retirementdateand canbeexercised at anytime after this date; and

● Section 187(2)(b) does not prescribeatimeframewithin which the dismissal should take place,provided itis after the employee has reached the agreed retirement date. This section affords an employer the right to fairly dismiss an employee based on ageat anytime afterthe employee hasreached his/her agreed retirement age. Allowing anemployee to work beyond the agreed retirement agedoes notconstituteawaiverofthisrightby the employer.

IntheGreatSouthcasethe Labour Appeal Court provides much-needed certainty to the questionswhich arise inrespectoftheapplicationof anagreed retirementagein SAlaw. Specifically,thiscase settles the position that a dismissal basedon anagreed retirement age does not amount to an automatically unfair dismissal.An employer may fairly terminate an employee who has worked beyond his/her retirement ageat anytime afterthe attainment of such age.

Employers shouldtake carefulnote ofthisjudgment to terminate the service of employees who have reached their retirement age and who have continued working, by simply giving the required amount of notice.

ENTITLEMENT

Ofcourse,if anewfixedterm contract or indefinite contract has been entered into withthe employee,the termsof suchcontractmust be honoured.

Asalways, acarefulconsideration of the rights and entitlementofallpartiesmust be undertaken before the employee isallowed tocontinue workingwithout anew contract, or isallowed to workwithaspecificcontract, or if theemployer compels theemployeetoleaveservice on reaching the retirement age.