While it remains highly beneficial for companies to create a healthy environment that will lead to loyal and long-serving employees, employers are often faced with a difficult decision when they reach the agreed or normal retirement age.
The employer might be sceptical of dismissing an employee based on age as it might amount to unfair discrimination that would constitute an automatically unfair dismissal.
In terms of Section 187(1)(f) of the LRA, a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against an employee, directly or indirectly, on any arbitrary ground, including, but not limited to, age.
However, in terms of 187(2)(b) of the LRA, a dismissal based on age is fair if the employee has reached the normal or agreed on retirement age for persons in that capacity.
Recently in the matter of Motor Industry Staff Association and Another v Great South Autobody CC t/a Great South Panel Beaters (JA68/2021), the Labour Appeal court considered whether an employer could fairly dismiss an employee based on age, after the employee has reached the agreed or normal age of retirement.
In this matter, the employee entered into an employment contract with the employer with a retirement age of 60. The employee reached 60 years of age in March 2018 but continued his services until they were terminated on 12 February 2019. At the time, he was 60 years and nine months old. The court had to decide whether the employer waived his right to dismiss the employee based on age or if it could indefinitely rely on the retirement age.
The court found that Section 187(2)(b) of the LRA affords an employer the right to fairly dismiss an employee based on age after the employee has reached their agreed or normal age. This right accrues to both the employee and the employer immediately after the employee’s retirement date and can be exercised at any time after this date.
The court further stated that an employment contract does not end by the effluxion of time when the employee reaches their retirement age but is deemed to continue. This means that the employee’s agreed or normal retirement age remains unchanged.
In conclusion, dismissal based on an employee reaching the retirement age does not constitute unfair discrimination in terms of section 187(1)(f) of the LRA if the employer can prove the following:
- The dismissal is based on age;
- The employer has an agreed or normal retirement age for employees employed in the employee’s capacity concerned;
- The employees have reached the normal or agreed retirement age.
Want to know more about what constitutes unfair dismissal? Contact your nearest SEESA Labour Legal Advisor. Alternatively, leave your contact details on our website, and a SEESA representative will contact you.
About The Author:
Pumezo Vabaza started his career at SEESA in 2021. He is currently a Labour and Consumer Protection & POPI Legal Advisor at the SEESA East London branch. He obtained his B.COM and LLB degrees from Wits and is an admitted legal Practitioner in the High Court of South Africa.
Resources:
- Labour Relations Act 66 of 1995;
- http://www.saflii.org/za/cases/ZALAC/2022/103.html.