Print
Category: Uncategorised

At what age must an employee retire?

In the absence of agreement between the employer and employee, there is no fixed age. So, to avoid uncertainty, employers should specify a retirement age in their employment contracts (or policies linked to that contract).

If your contract is silent as to a retirement age, can you ask an employee to retire if you think he or she has reached his or her sell-by date? 

Retirement

Section 187 (2) (b) of the Labour Relations Act provides that “a dismissal based on age is fair if the employee reached the normal or agreed retirement age for persons employed in that capacity.”

“Agreed’ is understandable, but what does “normal” mean? The “normal” retirement age is usually determined by the employer and agreed to by the employee in either a contract of employment or a policy linked to such a contract. 

In terms of section 187 (1)(f) of the Labour Relations Act, the dismissal of an employee based on his or her age will be automatically unfair. Such a dispute will be dealt with by the Labour Court and up to 24 months of the employee’s remuneration may be awarded as compensation.

If an employer dismisses an employee based on age, if the contract did not provide for a specific retirement date and the parties failed to reach agreement as to when the employee would retire, the employer can be met with a double whammy: a labour court could find that the employee’s dismissal on account of his age, in the absence of the existence of a normal retirement date, was automatically unfair in terms of s 187 of the LRA, and order the employer to pay the employee huge compensation. At the same time, a High Court could find that there was an act of unfair discrimination in terms of s 6 of the Employment Equity Act and order the employer to pay the employee damages for the unfair discrimination in terms of the EEA.

Nothing, however, prevents an employer from fairly dismissing an employee that is unable to continue to perform effectively in his position as a result of the age of the employee. Such situations will be dealt with as incapacity in terms of schedule 8 of the Labour Relations act.