Our labour courts still frequently hear cases in which employers have prematurely retired employees. In the main, this has to do with employers either retiring employees prior to the correct normal retirement date, or imposing a retirement age when none otherwise exists.
This emphasises the importance of employers ensuring that they have a prescribed, normal retirement age. Provision for a company prescribed normal retirement age is most often found in the contract of employment, which confirms, for example, that an employee will retire when he, or she, reaches the age of sixty-five.
Section 187(2)(b) of the Labour Relations Act confirms that “a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity”.
This must be contrasted with section 187(1)(f) which provides that “a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against an employee, directly or indirectly, on any arbitrary ground, including, but not limited to …. age”.
However, many employers do not make confirm their applicable normal retirement age anywhere what so ever. It’s not confirmed in any contracts of employment, and there is no policy on the company retirement age. If this is so, clues need to be sought on what the applicable retirement age is. From time to time, the clue can be found in the rules of a benefit fund, such as a pension or provident fund. This was the case is the recent Labour Court matter in NTM obo Israel Mothapo v Interwaste (Pty) Ltd [Case number J791/16] in a judgment passed on 13 November 2019.
In this case, the employer had retired the employee two and a half months after he had reached the age of sixty. He was the offered a 12-month fixed-term contract of employment. The employee objected to this, claiming that this was a “forced retirement”, as his benefit statement confirmed his normal retirement date was recorded as being 30 June 2020, when he would turn sixty-five.
The employer replied that the “retirement age is 60 as per the normal practice in our business… While the benefit statement makes provision for retired at 65, it does not (and cannot) enforce the company to retire its employees at that age – it is a company prerogative”. The employer’s representative argued that the employer’s reliance was placed on the norm as opposed to an agreement.
The Labour Court was underwhelmed by this argument, holding that “As pointed out, the respondent relies on the norm and not an agreement. The LAC in Rubin Sportswear v SACTWU and Others4 made it clear that an employer may not just wake up and say a particular age is a norm. The Court specifically stated the following: “A retirement age that is not an agreed retirement age becomes a normal retirement age when employees have been retiring at that age over a certain long period – so long that it can be said that the norm for employees in that workplace or for employees in a particular category is to retire at a particular age. An example would be where, without any formal agreement, employees in a particular category have over 20 years been retiring at a particular age without fail. The period must be sufficiently long and the number of the employees in the particular category who have retired at that age must be sufficiently large to justify that it is a norm for employees in that category to retire at that age. If the period is not sufficiently long but the number is large, it might still be that a norm has not been established. And if the period is very long but the number of employees in the particular category who have retired at that age is not large enough, it might be difficult to prove that a norm has been established.”
The judgment went on to bluntly note that “It is apparent to me that this defence of 60 years being a norm is nothing but an afterthought”.
In this case, it was ultimately held in the judgment that “Accordingly, this Court is not satisfied that the respondent succeeded in showing that 60 years is a normal retirement age. On the probabilities, account taken of the benefit statement, the agreed retirement age between the applicant and the respondent is age 65. It being common cause that the applicant had not reached the agreed age at the time of termination, his dismissal is automatically unfair”.
The employee was awarded twenty-four months’ remuneration in compensation.