A Right not to Retire?
So, you finally blew out the candles on that big birthday cake, all 65 of them. Then you start to think “Have I finally reached the retirement age?” Questions start to flood your mind, such as “Should I retire? Must I retire? Do I even have a choice? What if I’m not ready for retirement?”
Many would find this hard to believe, but the Basic Conditions of Employment Act does not set out an exact age at which employees must retire. In fact, determining the retirement age is much more complicated than one would think. Thus, if there is no answer to be found in legislation in this regard – do we then turn to the employer to set the retirement age?
Legislation has not completely left us in the dark in this regard, there is some guidance to be found in section 6 of the Employment Equity Act, which states that dismissal based on age will be discriminatory if it cannot be demonstrated by the employer that the age in question was an inherent requirement as to the specific work that employee was carrying out. Proving this is no easy task, failing which, section 187(1)(f) of the Labour Relations Act, will render the dismissal automatically unfair, which in turn will lead to a dispute to be dealt with in the Labour Court. This then begs the question; how does one retire an employee fairly?
Section 187(2)(b) states that “Dismissal based on age will be fair where the employee reached the normal or agreed retirement age for persons employed in that capacity”. In addition to section 187(2)(b), case law, namely Rubin Sportswear v SA Clothing & Textile Workers Union and others and In Cash Paymaster Services (Pty) Ltd v Brown, has set up two alternative standards against which to determine the retirement age: In the first instance agreement and in the second instance normality.
The test operates like this: the retirement age will be deemed to be that age as to which the employer and employee have reached an agreement or failing which the normal retirement age for that work will be the deemed retirement age. It is advisable to reduce any such agreement to writing.
Thus, despite the lack of a clear answer in legislation – it is argued that employers set the retirement age in their employment contracts with their employees – this would be defined as the retirement age set by agreement. Failing the latter, one can look to the company’s retirement fund rules or policy documents which will give an indication as to the normal retirement age for that particular job.
It comes with no surprise that this nuanced approach to determining the retirement age has been met with a fair number of legal challenges. Despite the diverging case law over the years, the case of MISA obo Landman v Great South Autobody CC t/a Great South Panel Beaters seems to have set the record straight.
In terms of this case, the employee’s retirement age was set out in the employment contract. However, when the employee finally reached the said age, the employee continued working with no objections raised from either the employee’s side nor that of the employer. It was only when the period of about a year had lapsed that the company issued a formal termination of employment letter. Based on the aforementioned, the employee raised an unfair dismissal dispute in the Labour Court. Unsurprisingly to the reasoning above, the court found that the dismissal was fair due to the employee having reached the agreed/normal retirement age.
The employee subsequently appealed to the Labour Appeal Court, arguing that the fact that the employee was allowed to work past the retirement age, created a presumption that a second employment contract, containing a new retirement age had been created. The argument was further premised on the fact that by not allowing this presumption will lead to possible abuse and prejudice.
The Labour Appeal court did not agree with the employee’s reasoning in that it stated that section 187(2)(b) of the Labour Relations Act does not leave room for such a broad interpretation. The section is clear as it states that the dismissal of an employee will be fair where that employee has reached the agreed/normal retirement age – which leaves the employer with a right to dismiss the employee in question, fairly based on age, at any time after they have surpassed the normal or agreed retirement age.
Article written by Faure & Faure Director Lloyd Fortuin and article clerk Nicola Pentz
For more information, contact 021 871 1200 or email firstname.lastname@example.org.
Faure & Faure Inc. – Your partner in Law in the Paarl and Boland Area.