The Labour Appeal Court in the case of Motor Industries Staff Association and Another v Great South Autobody CC T/A Great South Panel Beaters was tasked with the interpretation of section 187(2)(b) of the LRA which provides that a dismissal will be fair if the employee has reached the normal or agreed age of retirement.
In this case, the employee concluded a written agreement with the employer confirming the agreed retirement age to be 60 years of age. On 15 March 2018, the employee turned 60. However, the employee continued to render his services, and the employer continued to pay him his usual salary. During January 2019, almost a year after the employee reached the agreed retirement age, the employer informed the employee that his services would be terminated, and gave the employee a month’s notice.
The employee referred a dispute to the Labour Court claiming that his dismissal on the basis of his age constituted unfair discrimination in terms of section 187(1)(f) of the Labour Relations Act, and as a result, his dismissal was automatically unfair.
The Labour Court found the employee’s dismissal on the basis of his age not to be automatically unfair in that the employee had reached the agreed retirement age at the time of his dismissal. The employee’s dispute was accordingly dismissed.
At the Labour Appeal Court (“LAC”), the employee made the argument that, because he had continued to work after reaching the agreed retirement age, and neither of the parties raised the issue of retirement age, the initial contract of employment terminated. Accordingly, so it was argued, a new contract of employment was established, which contemplates a new retirement age.
In its defence, the employer relied on section 187(2)(b) of the LRA which provides that “a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons in that capacity”. The employer further denied the conclusion of a second tacit agreement which contemplates a new retirement age.
The LAC held that the ordinary meaning of section 187(2)(b) is that if an employer can prove that an employee has reached the normal or agreed retirement age, dismissal on the basis of age will be fair. The section further contemplates that where the employee continues to work after reaching the normal or agreed retirement age, the employment relationship continues and the contract of employment is deemed to continue. The normal or agreed retirement age does not change.
As to the question of when the right to dismiss the employee may be exercised, the court held that, there is no prescribed time limit within which the employer must enforce its right to dismiss an employee who has reached the normal or agreed retirement age. The right to terminate the employment relationship may occur at any time for as long as if the employee has reached his or her normal or agreed retirement age when the dismissal occurs.
This judgment provides much-needed clarity regarding the termination of employment where the normal or agreed age of retirement has been reached. This judgment also illustrates the Labour Appeal Court’s progressive and practical approach in applying our labour laws stating “Construing section 187(2)(b) in a manner that allows an employer to create opportunities for a younger and more innovative workforce, especially in a country such as ours with unprecedented unemployment levels, is not inconsistent with the spirit, purport, or objects of the right to fair labour practices in section 23 of the Constitution.”