Amalta Seevnarayan-Dhanee | Attorney: Legal Services Division
Between the ages of 60 and 65 years old has in practice become the accepted ages of retirement. Nevertheless, in South Africa there is no mandatory retirement age. The age of retirement is agreed to between employer and employee and reduced to writing in the employment contract. If not, it can be found in a company policy document.
Once an employee reaches the age of retirement, he/she leaves employment. However, given the economic climate we currently face, most individuals elect to continue working past the agreed retirement age.
The question that arises is, can an employer dismiss an employee after he/she reaches the retirement age and continues working and would such dismissal be deemed fair?
This question was answered by the Labour Appeals Court in a judgment delivered on 27 September 2022, in the case of Motor Industry Staff Association & Willem Frederick Landman vs Great South Autobody CC t/a Great South Panelbeaters.
The employee commenced employment with Great South Panelbeaters in November 2007. A contract of employment was signed on 30 January 2008, wherein it was agreed that the employee would retire upon reaching 60 years of age.
Upon reaching the age of 60 years old, the employee remained in the employ of Great South Panelbeaters and continued to receive his monthly remuneration. The issue of the employee’s retirement had not been discussed.
On 14 January 2019, the employee received a written communication informing him that his employment would terminate on 12 February 2019, as he had reached his retirement age.
The employee referred the matter to the Labour Court on the basis that his dismissal, based on age, constituted an unfair dismissal in terms of the section 187 (1)(f) of the Labour Relations Act 1996 (“LRA”). He alleged that after reaching the retirement age a tacit employment contract was entered into between himself and his employer.
The Labour Court dismissed the application and ruled that “In short, the principle established in [Schweitzer v Waco Distributors (A Division of Voltex (Pty) Ltd] is that a dismissal based on age is not automatically unfair in circumstances where the employee “has reached” the normal or agreed retirement age (own emphasis). This wording [in section 187(2)(b) of the LRA] contemplates a dismissal on account of age that occurs after the retirement date and insulates that dismissal against any assertions of unfairness.’
The employee argued that he had entered into a tacit employment agreement with Great South Panelbeaters, as his initial contract terminated when he reached 60 years of age. The employee relied on section 187 (1)(f) of the Labour Relations Act which stipulates that a dismissal is automatically unfair if inter alia it is based on age.
The employer, Great South Panelbeaters, relied on section 187 (2)(b) of the Labour Relations Act which states that “a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons in that capacity.
On analysing section 187 (1)(f) together with section 187 (2)(b), the Labour Appeals Court confirmed that section 187 (2)(b) is clear and unambiguous. It permits the employer to fairly dismiss an employee based on age at any time after the agreed retirement age has been reached. Further, the Court stated that section 187 (2)(b) does not impose a time frame on the employer as to when the dismissal should take place, provided the employee has reached the agreed retirement age. Further, the court confirmed that when an employee continues in the employment of the employer after he/she has reached retirement age, the contract of employment does not automatically terminate but is deemed to continue.
The Court confirmed that in terms of section 187 (2)(b) of the LRA, the employee’s dismissal was deemed fair, and accordingly the appeal was dismissed.
In the event an employer wishes to rely on section 187 (2)(b) of the Labour Relations Act, it must ensure that it can prove that the employee has reached the retirement age in order for such dismissal to be deemed fair.