Section 187 of the Labour Relations Act lists a number of reasons for dismissal that are automatically unfair, meaning the dismissal is unfair by virtue of the reason for the dismissal. Once it has been established that the reason for dismissal is one of the reasons listed in section 187, the employer will not be afforded the opportunity to justify its decision to dismiss the employee.
One of the reasons listed in section 187 includes discriminatory dismissals based on grounds such as race, sex, gender, religion and age. This general prohibition of unfair discrimination is in line with the provisions contained in the Employment Equity Act and the Constitution.
The Labour Relations Act however, makes provision for an important exception where age is concerned, namely that an employer may retire its employees when they have reached an agreed or normal retirement age. The employment relationship terminates automatically when the employee reached this agreed or normal age and this does not constitute a dismissal for purposes of the Labour Relations Act, nor is it automatically unfair.
Taking into consideration the fact that there is no general retirement age in South Africa, the important question to be answered is ‘what constitute a normal retirement age? In Rubin Sportswear v SACTWU & Others (2004) 25 ILJ 1671 (LAC) this question was considered. The facts of the case were as follows: Rubin Sportswear acquired the business of Val Hau et Cie as a going concern which meant that the Val Hau employees transferred to Rubin Sportswear on the same terms and conditions they enjoyed at Val Hau. The normal retirement age at Rubin Sportswear was 60 but there was no normal or agreed retirement age at Val Hau. A number of the transferred employees have reached the retirement age and Rubin Sportswear desired their retirement. All the employees were issued with a notice informing them that the retirement age of 60 is applicable on them with immediate effect and they were compelled to retire. The employees claimed that their dismissals were automatically unfair as it constituted unfair discrimination on the basis of age. Both the Labour Court and Labour Appeal court held that the employer failed to prove that the old employer had an agreed retirement age of 60 and the dismissals were automatically unfair.
In the more recent case of Hilary Truter v Carecross (Pty) Ltd C956/2013 (2015), where the employee referred a claim to the Labour Court where she sought to declare her dismissal from the employer automatically unfair as she alleged that she was discriminated against based on her age. The facts of the case, briefly, were as follows: the employee was informed by the employer that she had reached the employer’s retirement age of 65 and that she would therefore be placed on compulsory retirement. The employee stated in defence that she was the first person from the employer to be formally retired at the age of 65 and that the only other person who had been formally retired by the employer was an employee of 70 years. The employer alleged that it had adopted a resolution declaring its retirement age to be 65 and its normal retirement age is therefore 65.
Following the authority set out in Rubin Sportswear, the court held that there was no agreed retirement age as the resolution adopted by the board was never formally discussed or communicated with the employees. Their contract of employment also did not make provision for an agreed retirement age. The employer could not establish a normal retirement age as the employees who retired, only retired at the age of 70, not 65.
The dismissal was held to be automatically unfair and the employee was reinstated with costs.
Based on the above, it is clear that an employer cannot mere force an employee to resign, even if that employee has reached the age of 65. It is advisable for employers to ensure that they include an agreed retirement age when concluding contracts of employment or if they are relying on the concept of normal retirement age, they must ensure that such a norm has been ongoing and that it applies the norm consistently. However, if the existing contracts of employment do not deal with retirement, they cannot be unilaterally changed. Changes must be agreed with the incumbent employees.
Should an employer be unable to show that it retired an employee based on the agreed or normal retirement age, it may amount to an automatic unfair dismissal and compensation of up to 24 months and/or reinstatement.
Article by: Erenst du Toit
CEO Regional Manager – Gauteng