Retirement - can it be enforced by the employer?

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 some staff to continue working after reaching retirement age, 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 in the recent case of Solidarity obo Strydom and Others v State Information Technology Agency SOC Ltd) (2022) ZALCJHB 95. 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.

From a contractual perspective, the employment contract would come to an end automatically due to the effluxion of time upon the employee reaching the relevant retirement age. However, complications and uncertainty arise if the employer allows the employee to continue working without it being clear what the legal relationship will be thereafter.

The parties can, prior to reaching the agreed/normal retirement age, agree to a later retirement age and for employment to extend to this date. If this is not done and the employee simply continues working without a clear new arrangement, that employee is working on ‘borrowed time’ and could, according to case law, potentially be fairly dismissed at any time thereafter based on their age.

The exception would be if it is shown that the employer’s actions amount to a clear waiver of its rights to do so. 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 this regard, 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.

📌 They should require the employment relationship to end in all cases when employees reach the relevant retirement age.

📌 If further employment is offered to an employee who has reached retirement age, this should be done as a new contract, at the employer's discretion. New terms and conditions of employment may also be negotiated.

📌 Such a contract should preferably be concluded on a (post-retirement) fixed-term basis to avoid future uncertainty.

© Judith Griessel