It often happens that an employer dismisses an employee who has reached retirement age. The question is whether an employer is allowed to do this. The answer depends to a great extent on what the employer and employee agreed on and the conduct of the parties.
By Reinhard Evans, candidate attorney at Gerrie Ebersöhn Attorneys Inc.
As a general rule, an employer may not dismiss an employee based on their age. Section 187(1)(f) of the Labour Relations Act states that such a dismissal will be automatically unfair because it amounts to unfair discrimination against the employee on the basis of age.
However, there is an exception to this rule contained in section 187(2)(b) which states 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.”
Therefore, if the employer and employee agreed (e.g. in the employment contract) that the employee will retire upon a certain age and the employee reaches that age, the employee must retire unless the parties agree otherwise when they reach retirement age.
Where an employee’s contract of employment is silent on retirement age, the norm and practice of the profession or industry in which the employee works must be determined. For example, it might be the norm that employees retire at the age of 65. The employer, however, will have to prove that 65 is indeed the normal retirement age in that industry.
On the other hand, if the employee and employer did not agree upon a retirement age and the employer cannot prove that it is the norm or practice in the relevant industry to retire at a specific age, any purported or compelled retirement by the employer will constitute an automatically unfair dismissal as the employer will discriminate against the employee on the basis of age.
Finally, it often occurs that the employment contract stipulates a specific retirement age, but the employer allows the employee to continue working after reaching retirement age. The general rule is that the employer will be allowed to instruct the employee to go on retirement and that the aforementioned instruction will not constitute a dismissal (including an automatically unfair dismissal), as the employer will simply give effect to the employment contract.
The exception to the aforementioned is that if the employee can prove that through the employer’s conduct, the only inference drawn is that the employer waived the stipulated retirement age as contained in the employment contract.