Unfortunately, not all employees can work for their entire lifetime. People naturally grow old, and soon they might be unable to perform tasks they once did with ease. Employees usually look forward to a time when they can take a well-deserved break. Yes, you guessed it, today we are talking about retirement.
In terms of South African labour law, there is no mandatory retirement age stipulated. Section 6 of the Employment Equity Act (EEA) states that a dismissal based on an employee’s age will be considered discrimination. Section 187(1)(f) of the Labour Relations Act (LRA) also determines that a dismissal based on age will be automatically unfair. This can be referred to the Labour Court, where the Labour Court will have the necessary authority to issue an order of up to 24 (twenty-four) months’ compensation. A lawful retirement will not be seen as a dismissal in terms of the Labour Relations Act (LRA); thus, the CCMA will not have the power to arbitrate on such a matter.
Employers must add a retirement age to their contract of employment or their internal policies and procedures and apply it consistently. Should an employer wish to initiate an employee’s retirement, provision for this should have been made in the employee’s employment contract or within the policies and procedures in the workplace.
In Rubin Sportswear v SA Clothing & Textile Workers Union and others (2004)25 ILJ 1671, the Labour Appeal Court (LAC) held that “Section187(1)(b) creates a basis on which the employer can justify the dismissal of an employee on the grounds of retirement age. One basis is an “agreed retirement age”, and the other is the “normal retirement age”.
In South Africa, it is assumed that the retirement age will be between 55 (fifty-five) and 65 (sixty-five) years of age and that sometime during this window, they will be retiring. Most governmental policies stipulate that those 60 (sixty) years of age will be ready for retirement. For example, the Government Employees Pension Fund (GEPF) has specified that those 60 (sixty) years of age will be the appropriate retirement age for that specific fund.
If an employee has lawfully retired, it is up to the employer to issue the employee with a letter stipulating such retirement and a UI19 Unemployment Insurance Fund (UIF) document indicating “retirement” as the reason for termination. If there was a provident/retirement fund, the employer should also assist the employee in accessing this benefit.
Once an employee has retired, there will generally be no further obligations and entitlements towards their former employer. However, a few exceptions will exist, for example, where there is a valid restraint of trade clause. Once an employee has retired, they are free to do as they please, and an employer can appoint someone in the position previously occupied by the employee.
Retirement should not hold any negative consequences for an employee, provided that the employee has secured income for the time of retirement. There is also no obligation on the employer to offer any retirement fund to such an employee unless included explicitly in a Sectoral Determination or Bargaining Council provision and is specific to the sector the employer operates within.
Retirement should be seen as a well-deserved period of rest and a time to slow down and stop to smell those roses.
Article By: Carlene van der Lith
Dispute Resolution Official – CEO Kimberley