There is currently no statute which governs when employees must retire, however, it is well established law that there are only two instances when an employee may be required to retire. Firstly, where the retirement age has been agreed on and secondly, when employees have reached the normal retirement age.
According to BusinessTech, a retirement survey conducted by Just SA in March 2022 revealed that South Africans over 50 are not confident that they have saved enough to retire. According to the article, only two in five South Africans believe that their income will cover their monthly expenses should they live to be 100 years old.
What does this mean for employers?
Where employees have not saved enough, or at all, for their retirement, they are undoubtedly under pressure to work as long as possible. This may result in employers receiving pushback from employees when retired.
An example of such pushback is the recent Labour Court decision of Solidarity on behalf of Viljoen and Others, where the employees, although accepting that the normal retirement age as per the applicable pension fund rules was 60, attempted to argue that because the company allowed them to work beyond the normal retirement age it was no longer applicable and the employer was obliged to consult them and agree on a new retirement age.
In determining the impact of allowing employees to work beyond the normal retirement age, the Judge referred to the matter of Bank v Finkelstein t/a Finkelstein and Associates where the Court held that ‘…where an employee works beyond an agreed or normal retirement age. The harsh reality is that such an employee is in effect working on ‘borrowed time’. The employer, unless it can be proven that the employer specifically waived its rights to apply the retirement age, would remain entitled to at any point after the employee had attained the normal or agreed retirement age place the employee on retirement.”
In the Solidarity case, the Labour Court ultimately found that employees cannot blow hot and cold. In other words, the employees cannot agree that a normal retirement age exists, and also allege that the employer had not taken any steps to agree on a new retirement age. The Court held that that these two scenarios are mutually exclusive and concluded that if there is no agreement on the retirement date when an employee reaches the normal retirement age, the employer is entitled at any time thereafter to enforce the normal retirement age. In circumstances where the employees conceded that 60 was the normal retirement age, the Labour Court found that the employee had not been unfairly dismissed.
In this matter, because they conceded that there was a normal retirement age the Court was not required to determine the issue. It would have been interesting had the employees not conceded that a ‘normal retirement age’ of 60 was applicable.
An employee who successfully proves that they ought not to have retired and that they were discriminated against based on their age, could be awarded up to 24 months’ compensation. It is therefore imperative that employers adequately deal with the issue of retirement within the workplace whether it be by virtue of a clause in employees’ contracts of employment or through a retirement policy, furthermore, that the employer follow the correct steps should the employer require an employee to work beyond their retirement age.