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RETIRING AT THE RIGHT AGE

Article supplied by Sanlam Cobalt

  A very frustrating issue which time and again raises its head in the courts of law, is about the normal retirement age for employees. For retiring employees this is not a very pleasant argument to enter into after working for a number of years or a lifetime for a company. Neither is it a good way to commence with retirement by leaving the company on a sad note.
 
We usually refer to normal retirement age, but seldom do we confirm with employees what we mean when we talk about normal retirement age. It is only when an employee wishes to retire or is informed by the employer to retire that the misunderstanding becomes apparent, which then leads to a dispute.

The issue of retirement is covered in both the Labour Relations Act and the Employment Equity Act. Section 6 of the Employment Equity Act prohibits unfair discrimination in all employment policies and practices and under the Labour Relations Act; a dismissal is automatically unfair if the reason is based on arbitrary grounds, which includes age. Section 187(2)(b) of the Labour Relations Act makes provision for a “forced retirement” based on age, if the employee has reached the normal or agreed retirement age for persons employed in that capacity. What constitutes normal or agreed retirement age is of importance.
 
In Rubin Sportswear v SSACTWU and others the labour Appeal Court (LAC) held that the word “normal” must be given its ordinary meaning namely; usual, typical or expected, constituting or conforming to a standard, regular, ordinary, and conventional. The court further argued that a normal retirement age can be established only over a period of time and that retirement age becomes a normal retirement age when employees have been retiring at that age over a long period of time.

In Evans v Japanese School of Johannesburg in the Labour Court, an employee claimed that she had been unfairly discriminated against when her employer required her to retire on the grounds that she had reached and passed the normal retirement age. The employer had no policy on retirement age, but the employee’s evidence was that she had discussed this issue and that there was an apparent agreement that she would retire at 65. Later a policy was instituted fixing the normal retirement age at 60. Attempts to discuss the matter were fruitless, and the employee left the school. The Court found that on the evidence, there was an agreement to fix the retirement age at 65 and that the applicant would continue to work until then. For her unfair dismissal claim the applicant was awarded 24 months remuneration and for her damages claim under the Employment equity Act, the Court awarded her R200 000.

Recently in Solidarity & another v SA National Parks the outcome shows that the basic question in resolving such issues remains the same: what was the employee’s normal or contractually determined retirement age. The dispute here was whether the employee should retire at 60 or 65. What this case highlights is the importance of ensuring that all agreements and understandings are properly documented for parties to rely on should a dispute arise.

As can be learnt from the above cases, it would be more prudent to spend some time to consider what an employee understands the normal retirement age to be and to confirm and educate on what the company policy is. Waiting for the time when employees retire, could become an unfair and costly affair. After all is said and done, an employer is not prevented from encouraging voluntary early retirement. The employee’s decision to participate in this should be truly voluntary and in good faith.

Information provided by Kevin Hollenbach
Employee Relations Specialist

August 2008





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