Share on
RETIREMENT AGE – THE EMPLOYER’S CHALLENGE
Our law does not provide for a national or general age at which employees have to, or may retire. Contracts of employment may of course contain an agreed retirement age, in which case the employer may ask the employee to leave employment once he or she has reached the agreed age. This is obviously subject to any special conditions provided for in the contract, e.g. that the employee only retires at the end of the year in which he or she has reached the agreed retirement age.
The Labour Relations Act (s 187) prohibits discrimination on the basis of, among others, age. The LRA also provides though that the dismissal of someone who has reached the ‘agreed’ or ‘normal’ retirement age does not constitute unfair discrimination. What is ‘normal’ depends on what is generally accepted practice for the profession, sector, enterprise or job that the employee occupies.
One can obviously not compel employees to retire before they have reached the agreed or normal retirement age. Doing so constitutes an automatically unfair dismissal and establishes a claim for compensation in terms of s 187 of the LRA, as well as a claim for unfair discrimination under s 6 of the EEA.
However, the labour courts have gone further and decided that these provisions mean that an employer who permits an employee to work beyond the agreed or normal retirement age, may at any time thereafter issue a notice of termination in accordance with the employee’s contract of employment, and so ends his/her services. While this constitutes a dismissal, it is protected from scrutiny if the reason for the termination is the employee’s age. If it is anything else, however, e.g. misconduct, incapacity or operational requirements, the normal rules of unfair dismissal apply.
The retirement age found in the rules of a retirement fund does not automatically constitute an ‘agreed’ retirement age. The contract of employment itself must provide for a retirement age, or the rules of the fund must be incorporated with the contract of employment by reference.
What is the position if there is no agreed retirement age? May the employer impose one and then force employees who have reached this age to retire?
The courts have provided the following answers to some of these questions:
• Normal and agreed retirement ages are mutually exclusive: they cannot co-exist. Therefore, if there is an agreed retirement age the question of a normal age doesn’t arise.
• Where no retirement age has been agreed, an employer may establish and enforce a normal retirement age for its employees. However, it is incumbent on employers in this instance to first consult with affected employees regarding a date of retirement and to ensure that the date is in line with practice for the positions or relevant professions of the employees. The employer also needs to consider ways to accommodate employees close to the new retirement age to alleviate any hardship, and needs to be reasonable with regard to the implementation date of the new age.
• A retirement age cannot be imposed retrospectively, i.e. after the employee has already reached that age.
Employers would be well advised to provide for a retirement age in their contracts of employment.
Barney Jordaan of Maserumule Consulting for www.labourwise.co.za
Labourwise is an on-line labour relations service aimed at assisting employers
with the implementation of effective labour relations. They can be contacted
via www.labourwise.co.za or info@labourwise.co.za