Dismissal After Reaching Retirement Age

Introduction

Dismissal on the grounds of age is generally considered automatically unfair discrimination in terms of the Employment Equity Act (EEA) and the Labour Relations Act (LRA). However, South African labour law makes a clear exception when it comes to retirement. Employers are permitted to fairly dismiss an employee who has reached the normal or agreed retirement age.

The Legal Framework

1. Section 187(1)(f) of the LRA states that a dismissal is automatically unfair if the reason is based on age.
2. Section 187(2)(b) of the LRA, however, creates an exception: a dismissal is fair if the employee has reached the normal or agreed retirement age for employees in that capacity.
3. The EEA similarly prohibits unfair discrimination on the basis of age, but allows for retirement policies aligned with normal or agreed retirement ages.

What is the “Normal or Agreed” Retirement Age?

• Agreed retirement age: An age specified in the employment contract, collective agreement, or company retirement policy accepted by the employee.
• Normal retirement age: The generally accepted retirement age within the employer’s business, sector, or industry (often 60 or 65 years in South Africa).

Courts have ruled that even in the absence of a written clause, the established practice in the workplace may constitute a “normal” retirement age.

Important Case Law

Rubin Sportswear v SA Clothing and Textile Workers Union and Others (2004)

Confirmed that dismissal for age is automatically unfair unless the employee has reached the normal or agreed retirement age.

Karan t/a Karan Beef Feedlot v Randall (2012)

Reinforced that employers must be able to show either a contractual agreement or consistent company practice regarding retirement age.

Mahlangu v CIM Deltak (1986)

Established that a company can rely on an industry-wide accepted retirement age.

Practical Considerations for Employers

• Ensure employment contracts specify a clear retirement age.
• Apply retirement policies consistently across the organisation to avoid claims of discrimination.
• Where employees continue working past retirement age, a new agreement should be recorded in writing to avoid ambiguity.

Conclusion

Dismissal based purely on age is automatically unfair in South Africa. However, dismissal after reaching the normal or agreed retirement age is regarded as fair and lawful. Employers should take care to have clearly defined retirement policies and contracts to prevent disputes, while employees should be aware of their rights once they reach the retirement threshold.