South African labour courts still frequently hear cases in which employers have made employees retire prematurely. In the main, this has to do with employers either retiring employees before the correct normal retirement date or imposing a retirement age when none exists.
This emphasises the importance of employers ensuring that they have a prescribed, normal retirement age. Provision for a company-prescribed normal retirement age is most often found in the contract of employment, which confirms, for example, that an employee will retire when he or she reaches 65.
Section 187(2)(b) of the Labour Relations Act confirms that “a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity”.
This must be contrasted with section 187(1)(f) which provides that “a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against an employee, directly or indirectly, on any arbitrary ground, including but not limited to age”.
However, many employers do not confirm their applicable normal retirement age anywhere whatsoever. It is not confirmed in any contracts of employment, and there is no policy on the company’s retirement age. If that is so, clues need to be sought on what the applicable retirement age is. From time to time, the clue can be found in the rules of a benefit fund, such as a pension or provident fund. This was the case is a recent Labour Court matter, in NTM obo Israel Mothapo v Interwaste (Case number J791/16) in a judgment passed on November 13, 2019.
In this case, the employer had made the employee retire two-and-a half months after he had reached 60. He was then offered a 12-month fixed-term contract of employment. The employee objected to this, saying that this was a “forced retirement”, as his benefit statement confirmed his normal retirement date was recorded as June 30, 2020, when he would turn 65.
The employer replied that the “retirement age is 60 as per the normal practice in our business. While the benefit statement makes provision for retiring at 65, it does not (and cannot) enforce the company to retire its employees at that age – it is a company prerogative”. The employer’s representative argued that the employer’s reliance was placed on the norm, as opposed to an agreement.
The Labour Court was underwhelmed by this argument, holding that: “As pointed out, the respondent relies on the norm and not an agreement. The Labour Appeal Court in Rubin Sportswear v Sactwu and Others made it clear that an employer may not just wake up and say a particular age is a norm.
The Court specifically stated the following: ‘A retirement age that is not an agreed retirement age becomes a normal retirement age when employees have been retiring at that age over a certain long period – so long that it can be said that the norm for employees in that workplace or for employees in a particular category is to retire at a particular age.
An example would be where, without any formal agreement, employees in a particular category have over 20 years been retiring at a particular age without fail. The period must be sufficiently long and the number of the employees in the particular category who have retired at that age must be sufficiently large to justify that it is a norm for employees in that category to retire at that age.
If the period is not sufficiently long but the number is large, it might still be that a norm has not been established. If the period is very long, but the number of employees in the particular category who have retired at that age is not large enough, it might be difficult to prove that a norm has been established’.”
The adjudicator went on to note that: “It is apparent to me that this defence of 60 years being a norm is nothing but an afterthought”.
In this case, it was held in the judgment that: “Accordingly, this Court is not satisfied that the respondent succeeded in showing that 60 years is a normal retirement age.
On the probabilities, account taken of the benefit statement, the agreed retirement age between the applicant and the respondent is age 65. It being common cause that the applicant had not reached the agreed age at the time of termination, his dismissal is automatically unfair.”
The employee was awarded 24 months’ remuneration in compensation.