George Burns said: “Retirement at 65 is ridiculous! When I was 65, I still had pimples!” This might be the view of many South African employees, while others might feel the need to retire at 60 years old. Consistency regarding the retirement age needs to be applied by employers.

What does the law say?

Section 187 (1)(f) of the Labour Relations Act 66 of 1995, hereinafter referred to as the LRA provides that an employee may not be dismissed because of his/her age whilst Section 187(2)(b) of the LRA cites that a dismissal based on age is fair if the employee has reached normal or agreed retirement age for persons employed in that capacity.

Based on the above sections, it is clear that in the absence of an employment contract and/or retirement policy specifying retirement age, the dismissal of an employee by an employer based on his/her age is automatically unfair.

One can take this kind of dispute to the Labour Court, and it is possible that should the employee win the case, compensation will be awarded in an amount of up to 24 months of the employee’s remuneration.

It comes down to the company policy

South African legislation does not make provisions for a particular/specific retirement age; therefore, an organisation may determine a normal or agreed retirement age.

Retirement age may be indicated in various ways within an organisation, through the following means : 

  • Internal retirement policy.
  • Contract of employment and or by agreement.
  • Company benefit or mandatory sector or industry-imposed provident/pension fund rules.

An organisation may reserve the right to retain specific skills beyond retirement, via an agreement between the employer and employee.

Case Study

The case of BMW (SA) (Pty) Ltd v National Union of Metalworkers of SA & another (2019) 40 ILJ 305 (LAC) involves an appeal against a decision of the LC in terms of which the court found a dismissal automatically unfair on the basis that it amounted to unfair discrimination related to age.

The employer, in appealing the decision of the LC, contended that the employee was not dismissed, but retired at the agreed retirement age, alternatively at the employer’s normal retirement age of 60 years of age.

The employee was employed in 1986. At the time, the staff handbook indicated that the retirement age was 65 years of age. The employee’s letter of appointment was silent on the issue of retirement age. In 1995 the employer sought to change the retirement age to 60 years of age and notified all employees of the proposed change.

The employees were further notified that if they wanted their retirement age to remain at 65 years of age they were to notify the personnel department in writing by 31 May 1995. In the absence of such notification, the employees, by implication, would be taken to have acquiesced to the change.

Not all employees were aware of the notice and in 1997 they were given another opportunity to exercise their choice to keep their retirement age at 65 years of age. Again, and by implication, without notice to the employer of their wish to keep their retirement age unchanged, their retirement age would change to 60 years of age. Following this, the pension fund rules were also changed to reflect the retirement age as 60 years of age.

The employee alleged that she was aware of the 1997 notice and completed a form to elect to retain her retirement age at 65 years of age. The employer denied ever receiving the said form. The employee had no evidence to show that she had sent the form to the personnel department. Despite her protestations surrounding her retirement age, the employee retired at 60 years of age and thereafter brought her claim.

Court Findings

The court, after considering all of the various events and meetings held between the employee and the employer, found that at no time during her queries into the change to her retirement age did the employee allege that she submitted a form electing to keep her retirement age unchanged, and only stated that she could not remember agreeing to a change.

On the other hand, the employer was consistent in its responses to the employee and reiterated that the employee needed to provide proof of her election to keep her retirement age at 65 years of age.

The employee’s grievances were all premised on the employer providing her with proof that she accepted the change. In the circumstances and given the shortcomings and inconsistencies in her case, the LAC found that the probabilities were against the employee’s version. Accordingly, the LAC ruled that the LC misdirected itself in finding that the employer could not reliably deny receipt of the forms and that the employee’s case that she had submitted the forms was proven.

Ultimately, the question to be addressed by the LAC was whether the employee had submitted an election form retaining her retirement age at 65 years, or whether she had acquiesced to the change. In answering this question, the LAC stated that this should not be thought to be reversing the onus. The LAC found that given the length of time between when the change was initially made until 2010 when the employee first questioned the change, and the further period of acquiescence until 2014, the employee’s claim to have made an election cannot be found to be true

The employee’s burden is limited to producing evidence of her averment that she submitted a form that her employer received.

The employee was found not to have been dismissed within the meaning of s187(1)(f) of the LRA and the appeal was upheld.

It is in the best interests of the employer and the employee to clearly define and record the terms of employment and the retirement age.

Where no such retirement age and conditions have been agreed upon and stipulated in the employment agreement, the employer should be cautious of simply implementing such workplace policy or term of employment without following proper procedure to avoid any unilateral change of employment conditions.

Please contact our offices at 0861 737 263 if you have any queries or require any assistance regarding retirement age and implementing the necessary agreements and policies.