There is currently no specific law that provides at what age an employee must retire. The ordinary retirement age is usually between 60 to 65 years. An employee cannot be forced to retire unless their employment contract has a specified age which indicates when they must retire, or a rule contained in the workplace which sets the date of retirement.
Situations have arisen whereby an employer and employee do not have a signed contract of employment which stipulates the retirement age or a company policy which refers to same. The question which arises from this is, whether the employee can unilaterally decide to retire at any age where there is no agreement or policy in the workplace?
The Basic Conditions of Employment Act 75 of 1997, hereafter referred to as the “BCEA”, does not prescribe an age when an employee must retire, this will remain at the employee’s discretion. This may be problematic where an employer does not have an employment contract which indicates the retirement age. In Rubin Sportswear v SA Clothing & Textile Workers Union and others (2004) 25 ILJ 1671 (LAC), the Labour Appeal Court held that Section 187(1)(b) of the Labour Relations Act 66 of 1995 (LRA) creates two scenarios upon which an employer can justify the dismissal of an employee on the grounds of retirement age. The one is an agreed retirement age, the other is 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) ZALAC 34 (LAC), the Court confirmed that the dismissal of an Employee without an agreed retirement age would constitute an automatically unfair dismissal and that it could further be regarded as an act of unfair discrimination based on age in terms of section 6 of the Employment Equity Act 55 of 1998.
In Cash Paymaster Services (Pty) Ltd v Browne (2006) 27 ILJ 281 (LAC), the Labour Appeal Court held that the provision relating to the normal retirement age only applies to the case where there is no agreed retirement age between the employer and the employee.
The “normal” retirement age referred to above is usually determined by the employer and agreed to by the employee in either a contract of employment or a policy linked to such a contract. If there is no such an 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 rebut possible claims of discrimination upon the termination of the employment relationship.
In a broader meaning, the Court in Rubin Sportswear v SA Clothing and Textile Workers Union and Others (2004) 25 ILJ 1671 (LAC) at para 24 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-Mcmillan’s 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 word ‘normality’ is described as ‘the state or condition in which things are as they usually are’. The New Shorter Oxford English Dictionary describes the word ‘norm’ as meaning, among others ‘a standard, a type; what is expected or regarded as normal; customary behaviour, appearance’. As to the adjective ‘normal’, one meaning that the latter dictionary gives is ‘constituting or conforming to a standard; regular, usual, typical, ordinary, conventional’.’
In the case of Bos v Eon Consulting (Pty) Ltd (JS948/14) (2016) ZALCJHB, the Court entertained the company’s submissions regarding provident or pension fund in order 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) 34 ILJ 1190 (LC).
Considering the above, should an employee request to retire when there is no agreement, the employer may invoke the company’s provident or pension fund as a normal retirement age. Another normal retirement age which may be used is to follow the company’s standard practice of requiring employees to retire at a particular age. For example, should an employee request to retire at the age of 60 and the employer does not agree with same, the parties may explore the company’s provident or pension fund to establish the age of retirement. Should the provident or pension fund documents not be available, the company can look at the age of previous employees that retired to apply the normal retirement age.
Should an employer face difficulty with agreeing with the employees about the age of retirement, same can be remedied by unilaterally introducing a retirement age for all the employees. In Lyall v City of Johannesburg (JS 171/2014) (2017) ZALCJHB, the Court held that an employer is at liberty to unilaterally introduce a retirement age and to act in accordance with the retirement age. However, this implementation can never work retrospectively, as a result, an employee that had already exceeded the proposed retirement age at the time it is implemented, will not be affected by the policy.
In light of the above, an employer may refuse to accept a request for retirement from an employee should the employee not qualify in terms of the pension fund’s requirements or if the request is contrary to the company norm. Further, it is advisable 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.
Article by: Tshepang Makhetha
Dispute Resolution Official – Pretoria