What happens when an employee wants to retire but there is no agreement on retirement age?
By Tshepang Makhetha, a dispute resolution official for the Consolidated Employers Organisation.
Currently, there is no law in South Africa that specifically states at what age any employee must retire, so we must then rely on case law for guidance.
The usual retirement age is, of course, between 60 and 65 years but an employee cannot be forced to retire unless their employment contract specifies the retirement age or there is a company policy that sets the official age for ‘riding your horse into the sunset’.
Interestingly, the Basic Conditions of Employment Act (75 of 1997) does not prescribe an age for retirement, nor give guidelines for determining the number, and this may be problematic.
But, in the matter of Rubin Sportswear v SA Clothing & Textile Workers Union and others (2004) the Labour appeal court pointed out that Section 187(1)(b) of the Labour Relations Act 66 of 1995 (LRA) provides two scenarios where an employer can justify the dismissal of an employee on the grounds of retirement age. One is an agreed retirement age, the other is a normal retirement age.
This means that an employee can work for as long as they are able to unless there is an agreed retirement age.
In ARB Electrical Wholesalers (Pty) Ltd v Hibbert (2015), the court confirmed that the dismissal of an employee without an agreed retirement age would constitute an automatically unfair dismissal and that it could also be regarded as an act of unfair discrimination based on age in terms of section six of the Employment Equity Act 55 of 1998 – i.e., ageism.
If there is no agreement in place, the retirement age or date must be agreed to between the employer and employee. It is recommended that such an agreement should be reduced to writing to avoid possible claims of discrimination upon the termination of the employment relationship.
As to the normal retirement age scenario, in Cash Paymaster Services (Pty) Ltd v Browne (2006) the Labour Appeal court said that the provision relating to the normal retirement age applies where there is no agreed retirement age between the employer and the employee. Again, in Rubin Sportswear v SA Clothing and Textile Workers Union and Others (2004) the court defined “normal” as follows:
‘…What is the normal retirement age depends upon the meaning to be accorded the word ‘normal’ in s 187(2)(b). The word is not defined in the Act. It, accordingly, must be given its ordinary meaning. Chambers Macmillan SA Student’s Dictionary describes the word ‘norm’ thus: ‘You say that something is the norm if it is what people normally or traditionally do.’ It further says: ‘Norms are usual or accepted ways of behaving.’ It describes the adjective ‘normal’ as meaning ‘usual, typical or expected’.
The idea of ‘normal’ was given teeth in the 2016 case of Bos v Eon Consulting (Pty) Ltd. Here, the court entertained the company’s submissions regarding provident or pension funds to establish a normal retirement age.
The use of the provident fund to establish a normal retirement age was also suggested in Hibbert v ARB Electrical Wholesalers (Pty) Ltd (2013).
It follows then, that when an employee asks to retire and there is no agreement, the employer may invoke the company’s provident or pension fund as a normal retirement age. Again, if the business intends to use the provident or pension fund age as a template, then it is advisable to put such a policy in writing and consulting employees accordingly.
If an employer faces difficulty agreeing with the employees about the age of retirement, it can be remedied by unilaterally introducing a retirement age for all the employees.
In Lyall v City of Johannesburg (JS 171/2014) (2017) the court held that an employer is at liberty to unilaterally introduce a retirement age and to act in accordance with the retirement age. But this implementation can never work retrospectively, so an employee that had already exceeded the proposed retirement age at the time it is implemented, will not be affected by the policy.
Considering the above, an employer can refuse to accept a request for retirement from an employee if the employee does not qualify in terms of the pension fund’s requirements or if the request is contrary to the company norm.
Still, it is important for employers to ensure that they include an agreed retirement age when concluding contracts of employment. Employers should also bear in mind that if they are relying on the concept of normal retirement age, they must ensure that such a norm has been continuous and that it is applied consistently.