It is generally difficult in these times for a person to retire comfortably, and according to the South African Treasury, it is estimated that only 6 out of 100 South Africans can retire comfortably. In the current state of our economy, it makes it even more difficult. It is sometimes necessary for someone to work beyond the normal retirement age and to “retire from retirement”.

Now the question remains: What does an employer do when an employee wants to work past their agreed retirement age?

The Labour Appeal Court answered the question in Motor Industry Staff Association obo Landman v Great South Autobody CC t/a Great South Panel Beaters.

In this recent case, the Labour Appeal Court established, in short, that it is indeed lawful for an employer to terminate the services of an employee automatically if they work or have been working past their retirement age. The employee’s argument in the Landman case was that when a contract of employment stipulates a retirement age, that retirement age has been reached, and the employee continues to work thereafter, a new employment contract comes into existence.

The employer disagreed and argued that an employer can rely on the initially agreed retirement age in the contract of employment and that the employer may automatically terminate the contract of employment when an employee works past such retirement age. The court agreed with the employer and deemed the dismissal to be fair.

Employers should, notwithstanding the above, be cautious when allowing retired employees to continue their employment after retirement. Employers should refrain from entering into vague agreements. When they want their employees to work past their retirement age, employers should establish a new retirement age through a written agreement between the parties.

If the retirement age is 60, the employer and employee can enter into an agreement that the new retirement age is, for example, 62 years of age. Such an agreement will offer protection to employers.

Article By: Kenneth Lennox
Dispute Resolution Official – Bloemfontein