South African law does prescribe an employment retirement age. An employee’s retirement age may be agreed upon in the employee’s employment contract or contained in a policy document or retirement fund rules.
Dismissal on the grounds of age is automatically unfair (and constitutes unfair discrimination), unless the employee “has reached the normal or agreed retirement age for persons employed in that capacity” (section 187(2)(b) of the Labour Relations Act, 1995).
Dismissal if the parties agree upon the retirement age
The employer may require the employee to retire when they reach that age. Of course, the employer may decide to extend the duration of employment.
If an employee reaches the agreed or normal retirement age but continues to work uninterruptedly beyond that age, an employer may dismiss the employee at any time after that. The Labour Appeal Court (LAC) recently confirmed the legal position in MISA obo Landman v Great South Autobody CC t/a Great South Panel Beaters.
In this case, Landman reached the agreed retirement age of 60 but worked beyond that age. His employer terminated his employment on notice. With the Motor Industry Staff Association’s assistance, he referred an unfair dismissal dispute to the Labour Court. That court held that Landman’s dismissal based on age was not automatically unjust in circumstances where he had reached the agreed retirement age.
Landman appealed to the LAC, arguing that where an employee continues working after reaching the agreed retirement age and neither party relies on the fact that they have reached their retirement age, a new (second) employment contract comes into existence. It is then impermissible for the employer to rely on the retirement age as the second employment contract governs the employment relationship
The LAC disagreed with this argument and agreed with the Labour Court. It held that section 187(2)(b) of the LRA is clear and unambiguous: a dismissal will be fair where the employee “has reached” the agreed or normal retirement age. The section allows an employer to dismiss an employee fairly based on age at any time after the employee has reached their agreed or normal retirement age.
In Solidarity obo Strydom and Others v SITA, the Labour Court held that SITA could avail itself of the protection in section 187(2)(b) from when the employees reached their normal retirement age and at any time after that.
If the employment contract does not stipulate a retirement age
The employer cannot simply fix the age for retirement for existing employees. Trying to do so would be a unilateral change to terms and conditions of employment, which would have no legal effect.
If there is no mention of retirement age in the contract and there is no organisational norm, employees can continue to work until they cannot perform their normal duties. The employer can only terminate employment following labour legislation (that is, for misconduct, operational requirements, or incompetence) and must follow the procedures set out in the contract and labour law. The courts have found that it is unfair for an employer to terminate employment just because of age.
To avoid any uncertainty, it is vital that the employment contract specifies a retirement age or that the agreement refers to a policy or retirement fund rules that clearly state the normal retirement age.