Retirement has traditionally been viewed as a well-earned break from the daily demands of work; however, delaying retirement can lead to significant legal and financial consequences. This is evident in the recent Constitutional Court case, MISA and Another v Great South Autobody CC t/a Great South Panelbeaters; Solidarity obo Strydom and Others v SITA SOC Limited.
In general, employers and employees agree on a retirement age, which is often outlined in collective agreements. The issue in the MISA case arose when an employee continued working beyond the agreed retirement age and was later dismissed based on their retirement age. The key question was whether such a dismissal constitutes an automatically unfair dismissal.
Legal Framework:
Labour Relations Act (LRA)
Section 187(1)(f) of the LRA states that a dismissal is automatically unfair if it contravenes Section 5 or is based on discriminatory grounds, including, but not limited to, race, gender, age, disability, religion, or family responsibility.
The Constitution – Equality Clause
Section 9(3) prohibits the state from unfairly discriminating against anyone based on, among other grounds, age. Section 9(5) further stipulates that discrimination based on the listed grounds will be deemed unfair unless proven to be fair discrimination. Section 9(5) further states that discrimination on listed grounds is considered unfair unless it can be proven to be fair.
Employment Equity Act (EEA)
Section 6(1) of the EEA prohibits unfair discrimination based on age. However, Section 6(2) permits discrimination if it is based on inherent job requirements.
Case Analysis:
In the MISA case, Chief Justice Zondo initially referred to his previous ruling in Schweitzer v Waco Distributors (1998), where it was determined that a dismissal after reaching retirement age was fair, and no specific procedure needed to be followed. This ruling was grounded in Section 187(2)(b) of the LRA, which deems a dismissal based on age fair if the employee has reached the normal or agreed retirement age for their position.
However, in the present case, Zondo CJ ruled that when an employer delays ending the employment relationship after the employee reaches retirement age, the dismissal becomes automatically unfair. The employer, in this case, had continued the employee’s employment several months beyond the agreed retirement age, which led to an unfair dismissal.
The court found that continuing to employ someone past retirement age without addressing the matter in a timely manner prevents the employer from relying on the protections afforded by Section 187(2)(b). This exception only applies if the employee’s age begins to affect their work in line with inherent job requirements.
The MISA and Solidarity cases shared a common theme: The need for an employer to make an election within a “reasonable time” about whether to continue or terminate the employment relationship. In Segal v Mazzur (1920), the court emphasised that an individual may elect to take advantage of a situation but must make this decision within a reasonable time and cannot reverse it later.
In the Solidarity case, the court awarded the full 24 months of compensation, noting that the employer’s delay in dismissing the applicants after their retirement age was unreasonable.
Employers should be cautious and adhere to the agreed retirement age to avoid legal complications. The recent ruling leaves some ambiguity regarding the interpretation of these provisions, but the legal risks for employers remain significant. When it’s time for an employee to retire, it is best to ensure that the transition occurs promptly and within a reasonable time to avoid future disputes.
In essence, when it’s time to “hang up the gloves,” ensure the employee is out of the ring.
Article By Zothani Maseko
Dispute Resolution Official at Consolidated Employers Organisation (CEO SA)