Retirement Age

Retirement Age

“Retire from work, but not from life” – M.K Soni

During the past few months, I have been confronted with the question: “When must an employee retire?”

The fact of the matter is that there is no Act describing the age for retirement. It is the prerogative of the Employer to determine the retirement age applicable to his Company, whether it is in the employee’s contract of employment or in a policy to which the employee agreed to in writing.

In Kirsten and Southern Cross Manufacturing CO Ltd t/a Southern Cross Industries (2006) 27 ILJ 2471 (CCMA) it was held that where there is an agreed retirement age, employment terminates on the retirement date due to effluxion of time in terms of the agreement and there is no dismissal.

 

The problem arises if there is no agreed retirement age between the employer and the employee whether in a contract of employment or policy agreed by the employee determining retirement age.

Section 6 of the Employment Equity Act stipulates that it is unfair discrimination to discriminate against any person based on their age. Section 187(1)(f) of the Labour Relations Act further indicates that should it be found that a person was unfairly discriminated against due to their age, it would constitute an unfair dismissal. However, the employer is protected by Section 187 (2) (b) in that a dismissal based on age is not automatically unfair if the employer bases such dismissal on the agreed or normal retirement age.

 

In Rubin Sportswear v SA Clothing and Textile Workers Union and Others (2004) 25 ILJ 1671 (LAC) the Court held that section 187(1)(b) created two bases upon which an employer can justify the dismissal of an employee on grounds of age. The one is an agreed retirement age; the other is the normal retirement. The latter normal retirement age is generally established through a recognized practice of employees of that employer retiring at that age over a long period of time.

In Cash Paymaster Services (Pty) Ltd v Browne (2006) 27 ILJ 281 (LAC) it was held that the provision relating to normal retirement age should apply in cases where there is no agreement in respect of retirement age between the employer and employee.

 

In Hibbert v ARB Electrical Wholesalers (Pty) Ltd (2013) 34 ILJ 1190 (LC) it was held that the dismissal related to age is automatically unfair as the retirement age was unilaterally determined and the employer was unable to prove that the age used was the normal retirement age.

Based on the above case law, it is advisable for employers to ensure that they include an agreed retirement age in the contract of employment of employees.

 

Should employers wish to rely on the concept of normal retirement age, they must ensure that such a norm has been on going and that it has been applied consistently. Should the employer fail to proof that the retirement age of the employee was agreed with or that he retired the employee on the normal retirement age, the dismissal of such employee will be deemed as an automatic unfair dismissal an the employer may be liable for reinstatement or compensation of up to twenty four (24) months.

 

Should you have any questions, please feel free to contact one of our consultants.

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