Employers must ensure that the agreed retirement age of their employees is certain

According to the Labour Relations Act, a dismissal based on age will not be automatically unfair if an employee has reached the “normal or agreed retirement age for persons employed in that capacity”. Therefore, if an employee has reached either one of those ages, an employer would have a defence to a claim of dismissal based on age discrimination.

In the recent judgment of Harris v Ocean Traders International (Pty) Ltd, the Labour Court had to determine whether the applicant had been automatically unfairly dismissed by his employer, the respondent in the matter. The applicant had been required to retire when he turned 63 years of age, despite being under the impression that his agreed retirement age was 65. The applicant was aware that the company’s retirement policy had changed during his period of employment but he had never agreed to accept the changes.

The Court decided that since the applicant had refused to sign the contract altering the retirement age and the respondent did not pursue the issue, the understanding between the applicant and the respondent was that he would retire at age 65. The Court concluded that the applicant’s dismissal based on his age constituted an automatically unfair dismissal in terms of the Act and he was awarded 16 months’ remuneration as compensation.

This matter emphasizes the importance of employers ensuring that there is certainty regarding an employee’s agreed or normal retirement age.

Please note that in this matter, the applicant was not a member of an occupational pension plan. If an occupational pension plan is provided for, then the fund rules relating to retirement age would also be taken into account.

Click here to read the judgment: http://www.saflii.org/za/cases/ZALCJHB/2016/63.html