Retirement: What does the labour law say?

01 Jan 2018

When it comes to employees’ retirement, South African labour legislation does not make any provision for a retirement age. This subject is the most common one to be neglected or ignored by employers – especially where a retirement age was agreed upon in an employment contract between the employer and the employee.

If the employment contract does not make any provision for a retirement age, the employer can implement a retirement policy in the workplace stipulating the retirement of employees at a fixed age (which can vary for different job categories).

In the absence of both a retirement clause in the contract of employment and a retirement policy, the employer should handle retirement according to the normal practice set for previous retired employees in the company.

Section 187(1)(f) of the Labour Relations Act (LRA) states that it is an automatically unfair dismissal if the dismissal is based on unfair discrimination on the grounds of age. Employers also enjoy protection and guidance by Section 187(2)(b) of the LRA which states that a dismissal is not automatically unfair if it was according to the normal or agreed retirement age.

In the case of Hilary Truter v Carecross (Pty) Ltd C956/2013 the employee was compelled by the employer to retire at the age of 65 whereby the employer stated that she has reached the declared normal retirement age of 65. The employee reacted by saying that a previous employee only retired formally at the age of 70 and that she will be the first employee to formally retire at the age of 65. There was also no agreed retirement age in her employment contract and the employee was never informed of the normal retirement age. The employee claimed an automatically unfair dismissal against the employer based on her age.

The Labour Court referred to the case of Rubin Sportswear v SA Clothing & Textile Workers Union & Others (2004) where it was founded that an employee should retire according to the agreed retirement age in the contract of employment. In the absence of such agreed retirement age, the company should follow their “normal” retirement age that was established in practice for previously retired employees.

The Labour Court ruled that the employer failed to prove that there was an agreed retirement age as well as a normal retirement age set in the company, also that no other employee had retired at the age of 65. The court ruled that the dismissal was automatically unfair and the employee was reinstated.

Employers should make provision for a retirement clause in their employment contracts, alternatively a retirement policy, in the workplace. Imperative to this is that employers should monitor the agreed retirement age of an employee due to the fact that employers tend to neglect or ignore the agreed age resulting in the retirement clause to lapse and be of no value.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)