Retirement Age, can an employer fairly terminate the services of an employee who has worked beyond his/her retirement age?

The above question has been the subject of a highly contested legal debate until recently when the Labour Appeal Court…
By Nelson Tjiane
14 November 2022

The above question has been the subject of a highly contested legal debate until recently when the Labour Appeal Court was faced with the same issue. In the matter between Motor Industry Staff Association obo F.W Landman v Great South Panel Beaters t/a Great South Panel Beaters JA68/2021 (LAC) the Court had to determine whether termination of the employee’s services who has worked beyond his/her retirement age, constitutes unfair dismissal. The facts, of the case appears hereunder.

1. The facts

The second appellant (Willem Frederick Landman) commenced employment with the respondent during November 2007. On 30 January 2008, the second appellant and respondent employer (Great South Panel Beaters) entered into a written employment agreement which inter alia stated that the second appellant’s retirement age is 60 years of age. He turned 60 years old on 15 March 2018. The respondent did not retire him when he turned 60. The second appellant therefore continued to render his services to the respondent as usual, and the respondent continued to pay him his usual salary. The second appellant continued to work for the respondent for the remainder of 2018, and the respondent never once raised the issue of his retirement in that time. However, on 14 January 2019, the respondent wrote to the second appellant informing him that his services would terminate with effect from 12 February 2019 as he had reached the agreed retirement age of 60. By this point, the second appellant was already 60 years and nine months old. His last day of employment with the respondent was 12 February 2019.

2. Common cause

It is common cause that the respondent employer dismissed the employee due to his age.

3. Labour Court

Aggrieved by the decision to discharge him, due to him reaching the agreed retirement age, the second appellant referred a dispute to the Labour court under the auspices of section 187 (1) (f) of the Labour Relations Act, as amended (“LRA”) contesting such dismissal constituted unfair discrimination. The Labour Court per Justice Van Niekerk J dismissed the second appellant’s claim on the ground that such termination does not constitute unfair dismissal. Aggrieved by the Labour court decision, the second appellant appealed the Labour court decision.

4. Labour Appeal Court (“LAC”)

The second appellant submitted that his dismissal is arbitrary as per the provisions of section 187(1)(f) in that his dismissal was based on age and therefore automatically unfair. Not only did he state that his dismissal is automatically unfair, but he also proceeded to submit that the respondent employer has unfairly discriminated against him due to his age. It was the second appellants further submission that by allowing him to work beyond the retirement age, the respondent employer has waived its right to rely on the retirement age as contained in his contract of employment. Lastly, the employee submitted that, upon reaching retirement age, the old contract of employment came to an end by effluxion of time and the new tacit contract of employment (presumably on the same terms and conditions as “an expired contract”) had come into existence between himself and the respondent employer.

In refuting the employee’s submission, the respondent employer relied on the provisions of Section 187(2)(b) of the LRA and submitted that the employee was fairly dismissed due to him reaching the retirement age as per the written contract of employment between the parties.

In reaffirming the decision of the Labour Court, the Labour Appeal Court referred with approval, the approach adopted by the Labour Court in Schweitzer v Waco Distributors (A Division of Voltex (Pty) Ltd). In Schweitzer the Court held that for a dismissal in terms of section 187(2)(b) of the LRA to be fair, the following three conditions must be present:

  1. the dismissal must be based on age;
  2. the employer must have an agreed or normal retirement age for employees employed in the capacity of the employee concerned; and
  3. the employee must have reached the normal or agreed retirement age.

The LAC in MISA found that the above factors as enunciated in Schweitzer has been met.

In its reasoning, the LAC concluded that section 187(2)(b) of the LRA affords an employer the right to fairly dismiss an employee based on age, at any time after the employee has reached his or her agreed or normal retirement age. The LAC therefore accepted the employer’s submission and held that the dismissal of the employee Mr Willem Frederick Landman was fair in that he had reached the agreed retirement age. The appeal was therefore dismissed.

5. Conclusion

It follows from the above judgement that the termination of employees’ services who have reached his or her agreed or normal retirement age is considered correct and fair in law. Importantly, the court noted that the right to terminate, accrues to both the employee and the employer immediately after the employee’s retirement date and can be exercised at any time after passage of such a retirement date.