A recent case dealing with the dismissal of an employee who had reached retirement age sparked consideration by the courts as to whether an employee can be fairly dismissed based on their age, specifically relating to retirment.
Legal experts from Cliffe Dekker Hofmeyr said that in the case of Motor Industries Staff Association and Another v Great South Autobody , the Labour Appeal Court (LAC) held that under section 187(2)(b) of the Labour Relations Act (LRA), an employer can fairly terminate the services of an employee at any stage after the retirement age has been reached.
The court noted that this provision provides a framework for employment opportunities for younger South Africans, especially in a country that is plagued by record levels of youth unemployment, said Cliffe Dekker Hofmeyr.
Facts
An employee entered into an employment contract with the employer on 30 January 2008. The employment contract expressly stated that the employer’s retirement age was 60 years. In March of that year, the employee turned 60 and continued to work.
Come January 2019, the employer was informed in writing that his contract would be terminated with effect from 12 February as he had reached retirement age.
“The employee was subsequently dismissed and referred a dispute to the Labour Court contending that his dismissal constituted unfair discrimination in terms of section 187(1)(f) of the Labour Relations Act 66 of 1995, as amended (LRA),” said Cliffe Dekker Hofmeyr.
The Labour Court
The court considered section 187(2)(b), which reads that the dismissal of an employee based on age is not automatically unfair in circumstances where the employee has reached the agreed or normal retirement age, said Cliffe Dekker Hofmeyr.
The Labour Court found that since the employee had already reached the retirement age of 60 (as per his employment contract) at the time of his dismissal, section 187(2)(b) applied and therefore, the employee’s dismissal was fair, said Cliffe Dekker Hofmeyr.
“Consequently, the Labour Court dismissed the employee’s claim and further held that the argument that the parties “tacitly” entered into a new employment contract when the employee continued to render his services beyond the age of retirement would “have no traction”.”
The Labour Appeal Court
In the LAC, dissatisfied with the findings of the prior court, the employee was successful in his application to apply for leave to the LAC.
The employee argued:
- In terms of section 187(1)(f), his dismissal was automatically unfair because the reason for his dismissal was based on an arbitrary ground, in this case, his age.
- The employee alleged that his dismissal was based purely on age, and by dismissing him, the employer had unfairly discriminated against him.
According to Cliffe Dekker Hofmeyr, the employee persisted with the argument that the employer had waived his right to rely on the retirement age in the employment contract by allowing him to continue working after 60 and, alternatively, that a new (second) contract of employment had come into existence between the parties.
The employer invoked the defence contained in section 187(2)(b) of the LRA and denied the employees two points of argument.
The LAC found that in terms of legislation – as the employee had already reached the agreed or normal retirement age – the dismissal was fair.
“More importantly, the LAC found that section 187(2)(b) does not prescribe a timeframe within which the dismissal should take place and therefore, this section affords the right to an employer to dismiss an employee on the basis of age at any time after the employee has reached the retirement age.”
The LAC further found that this right also affords employees the opportunity to terminate their services at any time after reaching the agreed retirement age. The LAC accordingly dismissed the employee’s appeal, said Cliffe Dekker Hofmeyr.
Findings
According to Cliffe Dekker Hofmeyr, this ruling, in essence, provides clarity on working past retirement age and points to a court having little sympathy for an employee that stands to lose their retirement benefits if they work past the prescribed age.
“In essence, the LAC has held that section 187(2)(b) enables employers to fairly terminate the services of an employee at any stage after the retirement age has been reached.”
- Commentary by Fiona Leppan, Thato Maruapula and Karabo Nemudibisa from Cliffe Dekker Hofmeyr
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