In a milestone judgment has been handed down on by the labour appeal court (“LAC”) in
MOTOR INDUSTRY STAFF ASSOCIATION OBO LANDMAN V GREAT SOUTH AUTOBODY
The legal position in relation to retirement and dismissal based on age in terms of section 187(2)(b) of the Labour Relations Act, 66 of 1995 (“LRA”) has finally been put to bed so to speak.
Section 187(1) of the LRA provides that a dismissal is automatically unfair if the employer, in dismissing the employee, acts contrary to section 5 or if the reason for the dismissal is-
“(f) that the employer unfairly discriminated against an employee, directly or indirectly, on an arbitrary ground, including but not limited to…age”
Section 187(2)(b) of the LRA provides an exception to the general rule created by s 187(1)(f) and provides as follows-
“(2) Despite subsection (1)(f) –
a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.”
Before looking at the judgement we must consider what is the “normal” or “agreed” retirement age.
Normal Retirement Age
In HOSPERSA obo Venter v SA Nursing Council (2006) 27 ILJ 1143 (LC) the Court held that the provisionS in the section referring to the “normal” retirement age found application only where there was no “agreed” retirement age.
In other words, an “agreed” retirement age is binding even if there is a different “normal” retirement age.
In any enquiry regarding the retirement age of an employee, it ought first to be established whether there was an agreed retirement age.
If so, that is the retirement age applicable and the termination of an employee’s employment when he/she attains that age would be neither discriminatory nor unlawful. If there is no such an agreed retirement age pertaining to the particular employee, the enquiry ought then to be what the normal retirement age for an employee.
In Rubin Sportswear v SA Clothing & Textile Workers Union & others (2004) 25 ILJ 1671 (LAC), the LAC held that a certain age cannot become the normal retirement age simply because the employer so decrees.
A retirement age becomes a normal retirement age when employees have been retiring at that age over a certain long period – so long that it can be said that the norm for employees in that workplace, or for employees in a particular category, is to retire at that age.
The period must be sufficiently long and the number of employees who have retired at that age must be sufficiently large to justify saying that it is a norm for such employees to retire at that age.
Agreed retirement age
An agreed retirement age is usually contained in the employees’ contracts of employment or workplace policies.
Judgment
Employees often continue working beyond the normal or agreed retirement age.
The question which then arises is whether the employer can rely on the previous normal or agreed retirement age as a legitimate or fair ground for termination?
The LAC found that the employer does not waive the right to dismiss an employee who works beyond the agreed or normal retirement age in terms of section 187(2)(b) of the LRA.
Section 187(2)(b) affords an employer the right to fairly dismiss an employee based on age at any time after the employee has reached his or her normal or agreed retirement age.
This right accrues to both the employer and the employee and can be exercised at any time after this date.
Accordingly, where an employee continues to work for the employer on an uninterrupted basis after reaching the retirement age, the normal or agreed retirement age remains unchanged.
The employer may invoke section 187(2)(b) of the LRA at any stage and fairly dismiss the employee.
