Post-Retirement Dismissals

Background of the Case

In South Africa, dismissals based on age are automatically unfair under section 187(1)(f) of the Labour Relations Act (LRA) unless the employee has reached the normal or agreed retirement age for their occupation. The key question in this case was: Can an employer dismiss an employee after they have reached the agreed or normal retirement age, and if so, when?

Over time, the courts have debated the interpretation of this rule, particularly as people are living longer and seeking to work beyond their retirement age. In recent cases, including Landman v Great South Autobody and Solidarity obo Strydom v State Information Technology, the Constitutional Court was asked to interpret section 187(2)(b), which provides an exception for dismissals based on age when an employee reaches retirement age.

Key Concepts

• Normal Retirement Age: The age at which it is standard to retire, depending on the industry or job type. This can vary.
• Agreed Retirement Age: The retirement age that the employer and employee agree upon in the contract. This may differ from the normal retirement age in the industry.

Case Details

The Constitutional Court was presented with three cases where employees were dismissed after reaching their agreed or normal retirement age. The question before the court was whether an employer can dismiss an employee immediately once they reach the retirement age, or if certain conditions apply.

The Three Judgments

1. Zondo CJ’s Judgment:
• Zondo held that a dismissal based on age is only fair if it happens on the exact day the employee reaches the agreed or normal retirement age, unless the agreement specifies otherwise (e.g., if the retirement date falls on a non-working day, it could be extended to the last day of the month).
• Key point: The provision should be narrowly interpreted to prevent abuse and to protect employees from unfair age-based discrimination.
2. Van Zyl AJ’s Judgment:
• Van Zyl argued that employers may dismiss employees once they’ve reached the retirement age, but it must happen within a reasonable period. Failure to do so may imply the employer wishes to continue the employment, and the dismissal could be challenged.
• Key point: The reasonable period in which the employer must act will depend on the specific case, but the delay in dismissal could imply a waiver of the right to retire the employee.
3. Rogers J’s Judgment:
• Rogers held that an employer can dismiss an employee after the retirement age has been reached, as long as reasonable notice is provided.
• Key point: This judgment aligns most closely with the Waco Distributors case, allowing dismissals after retirement age but requiring reasonable notice.

Legal Implications

• The Law is Unsettled: The Constitutional Court did not reach a consensus, meaning there is still uncertainty in how the law should be applied. Currently, the courts will likely continue applying the Waco case interpretation, which allows an employer to dismiss an employee at any point after the retirement age is reached, provided reasonable notice is given.
• Protection for Employees: Employees are protected from unfair dismissals based on age, but they need to understand their retirement age as defined in their contract. If the contract is unclear, they may face disputes later.

Practical Advice for Employers

• Clearly Specify the Retirement Age: Employers should explicitly state the agreed retirement age in employment contracts to avoid confusion. This helps prevent future disputes regarding when retirement occurs.
• Termination Date: It’s advisable for employers to define that the employee’s retirement date is the last day of the month in which they reach the agreed retirement age. This avoids ambiguity and prevents possible disputes.
• Revised Retirement Dates: If employees are allowed to work beyond their retirement age, the revised date should be clearly documented to avoid misunderstandings.
• Reasonable Notice: Employers should give reasonable notice if dismissing employees after the agreed retirement age, as this is a key requirement from the court’s judgments.

Conclusion

The case shows that South African law is still evolving regarding post-retirement dismissals. While the Constitutional Court’s failure to reach consensus leaves the law in a state of uncertainty, the Waco case interpretation (which allows dismissals after retirement age) is still likely to be followed in practice. Employers should ensure they clearly define retirement terms in contracts, and employees should know their rights to avoid unfair dismissal based on age.

Source: STBB