“When cognitive capacities are the focus, the 70s are the new 50s.” (IMF)
Fake news articles suggesting that South Africa was implementing a new standard retirement age policy, supposedly from 30 May this year, recently went viral on social media. Convincingly structured to look realistic (AI’s dark hand there?), the articles suggested that 65 is the new universal standard retirement age for all employees across all sectors.
Complete hogwash.
What the law actually says
- Age discrimination is “automatically unfair”, and any employer found to be guilty of it by unlawfully forcing an employee to retire early faces a compensation order of up to 24 months’ remuneration (double the normal award for a run-of-the-mill unfair dismissal), re-instatement or re-employment.
- There is, however, an escape clause there for employers: “A dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.”
- Even where a dismissal itself is fair, you must still follow a fair process in implementing it – more on that below.
It’s an important topic, with increasing numbers of employees wanting to (or needing to) work into their 70s. A recent Labour Court ruling showing those principles in action is well worth taking note of.
The plumber forced to retire at 60
An artisan plumber with 12 years of service had his employment terminated when he turned 60.
He asked the Labour Court to declare his dismissal automatically unfair as other employees had been allowed to work until they were 65. What’s more, he denied ever agreeing to retire at 60.
The employer countered that it had a two-tier retirement policy which obliged employees with more physically demanding jobs (site workers such as artisan plumbers) to retire at 60 whilst supervisory and administrative personnel (such as foremen and office staff) only had to retire at 65.
On the facts, the Court declared the dismissal to have been fair, finding that the evidence pointed to the employee being subject to a retirement age of 60 because:
- The employer’s retirement policy was in line with the rules of the applicable Building Industry Pension Scheme.
- Although no signed copy of his full employment contract could be found, the employer did produce a standard annexure to such a contract, confirming retirement at 60 and “probably” signed by him (he denied signing it but agreed the signature looked like his).
- A number of his fellow plumbers had also been retired at 60 (he attended their retirement functions), and other cases of retirement at age 65 cited by him related to employees in the “65 tier” – that is in supervisory or administrative positions.
- Another plumber’s contract was produced, with the retirement provision in place.
Bottom line: the employee hadn’t proved that his retirement at the applicable retirement age of 60 was an automatically unfair dismissal, and the Court held his dismissal to be fair.
How to ensure that an age-related dismissal is fair
First prize is to specify an agreed retirement age in all your employment contracts, ideally from day one. If you want to add a retirement clause later, or to change anything about an existing clause, be sure to do so by negotiation and agreement, not unilaterally. And be sure to keep the original, fully-signed contract safe and accessible (unlike the employer in this case who had to rely on a scan of just the annexure to the contract).
Alternatively, be ready to prove that there is a “normal or agreed retirement age” for employees employed in the same capacity.
The dismissal must be genuinely based on the employee having reached retirement age and cannot, for example, be a disguised retrenchment or a dismissal for some other reason.
It’s crucial that you follow a fair process. Open communication, reasonable notice, and applying the rules consistently to all employees could be critical here.
Every case will be different, so ask us for advice specific to your situation.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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