This is a sensitive and much-debated topic. For various reasons, many employees are not ready to retire when their retirement age approaches and employers often have to deal with challenges in this regard. This is especially the case if the employer does not have a clear policy around retirement and allows staff to continue working after reaching retirement age, or allow some to continue working but not others. Does enforcing retirement amount to age discrimination, or some other type of discrimination if only some employees are allowed to continue working after retirement age? Generally, no. Our courts have been dealing with aspects around retirement over the years and the applicable legal principles have been scrutinised again earlier this year in the case of Solidarity obo Strydom and Others v State Information Technology Agency SOC Ltd) (2022) ZALCJHB 95, and more recently on 27 September 2022 by the Labour Appeal Court in MISA obo Landman v Great South Autobody CC t/a Great South Panel Beaters (case JA68/21). As long as certain conditions exist, having reached retirement age is a valid justification for termination of employment based on age:
the employer must have an agreed (e.g. in the contract of employment or subsequently between the parties) or normal (e.g. stipulated in pension fund rules, or usual for that sector) retirement age;
the employee must have reached this age; and
this must be the reason for the termination.
Complications and uncertainty could arise if the employer allows the employee to continue working without it being clear what the legal relationship will be thereafter. There have been many debates and different interpretations on this subject over the years. The Labour Appeal Court in the Landman case was however at pains to explain that normal contractual principles should not be allowed to unduly muddy the waters when it concerns a sui generis right granted to an employer in terms of s187(2)(b), to dismiss an employee who continues to work after reaching retirement age.
The LAC made it clear that the employment contract does not automatically end upon retirement; nor does a 'new' contract (without the previously agreed upon retirement age) then tacitly come into being by the employer allowing the employee to continue working. The same employment contract remains valid if the employee is simply allowed to continue working after reaching the relevant retirement age, and the right of the employer to fairly dismiss the employee on the basis of age, at any time thereafter, is still applicable and it would not constitute an automatically unfair dismissal. Without a clear and explicit arrangement to the contrary (see below), the employee is essentially working on 'borrowed time' in this scenario.
The situation would be different when the parties, prior to reaching the agreed/normal retirement age, agree to a later retirement age and for employment to then extend to this date.
An exception would also apply it is shown that the employer’s actions amount to a clear waiver of its rights to dismiss the employee under such circumstances. Employees may argue that such waiver is indicated if the employer has a practice of allowing (some) employees to continue working after retirement. This practice may also give rise to challenges of 'discrimination' by those who are not permitted to do so by the employer.
From a legal perspective, it is unlikely that the mere fact that some employees continue working after having reached the relevant retirement age, will be regarded as sufficient proof of a waiver by the employer. Also, for a claim of unfair discrimination to succeed, the employee has to demonstrate more than mere differentiation in treatment. Specifically, the ground on which the alleged unfair discrimination is based, must be clearly specified by the employee and linked to one or more of the prohibited grounds set out in s6(1) of the Employment Equity Act (e.g. race / gender / political persuasion / religion, etc.)
What should employers do?
Whilst the legal position therefore appears to favour employers in respect of dismissing employees at any time after reaching their agreed or normal retirement age, it is worthwhile to adopt and implement a clear policy position, to avoid spending undue time and effort on addressing challenges of this kind:
📌 Employers should have a clear retirement age in their workplace that is known to employees.
📌 It may be prudent and less complicated from a policy perspective, to formally end the employment relationship in all cases when employees reach the relevant retirement age.
📌 If further employment is envisaged for an employee who has reached retirement age, this could be done as a new contract, at the employer's discretion. New terms and conditions of employment may also then be negotiated.
📌 Such a contract should preferably be concluded on a (post-retirement) fixed-term basis to avoid future uncertainty.
© Judith Griessel