Know the Right Age to Retire

These days workers retire later in life than previously. But circumstances beyond the control of an employer and employee or the operational requirements of the employer may force an employee to take early retirement.

Employees who are dismissed due to their age are protected by legislation and by the courts. In terms of the Labour Relations Act (LRA), dismissals on the basis of age are automatically unfair. However, in two specific circumstances a dismissal based on age is considered fair. Section 187(1)(f) of the LRA provides that a dismissal based on age is automatically unfair.

In the context of retirement, it appears at first glance that if the employee and employer do not agree on a retirement age, then a forced retirement may be unfair. An employee who is able to show that he or she has been unfairly dismissed because of his or her age can be awarded up to 24 months compensation and/or reinstatement.

Section 187(2)(b), however, provides 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". In terms of this section, a dismissal based on age is fair when the retirement age has been agreed upon and when the employee has reached the normal or agreed retirement age for persons in that job.

The Labour Court has held that only in the absence of an agreed retirement age is the employer entitled to determine the employee's retirement age. Employer and employee should agree on retirement age in the field the employee is working in. The onus is on the employer to show that not only had the employee reached normal retirement age but that the retirement age is normal to employees employed in the same capacity as the employee.

The employer may not unilaterally declare a certain age to be the normal retirement age. The employer must attempt, through consultations, to reach agreement with the employee on what constitutes the normal retirement age. However, such consultations don't have to end with an agreement being reached between the employer and employee regarding the age on which an employee will go on retirement.

In the event there is no agreement and the employer is able to prove that despite no deal being reached the employee has reached the normal retirement age for employees in that occupation, the employee may agree to be lawfully terminated and such termination will not be unfair.

It is possible for an employee to reach an agreement with their employer to work past the agreed or normal accepted retirement age. Thus, it is important for employees to know what their contracts of employment provide in terms of retirement age.

If the employment contract is silent on the issue of a retirement age, employees should be conscious of what the normal retirement age is for people employed in the same position as them, as this retirement age is likely to be the one on which they will be expected to retire.

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