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 retirement employee at seventy

In the current economic climate; questions about retirement are becoming a more common and often asked query.

We received this query last week for example.

“Hugh,

I am a widow now 59 years old and have been working for nearly 18 years for the same company. The office manager recently came into my office and told me that I will have to retire when I am 60 as that is the age everyone retires from the company. I had heard that most people retired at 60; but was hoping that I could stay on till I was at least 65 so as to build more of a nest egg for myself. I was shocked and did not respond to him. Am I obliged to retire at age 60 or am I allowed to continue working till I am 65?”


There are many employees in the same situation.

It is firstly important to note that retirement relates to the termination of the employment relationship with an employer. In South Africa there is no single applicable retirement age which applies across the board to all employees. This means that establishing the retirement age applicable to a particular employee will have to be determined in relation to the specific set of facts applicable to the employee’s situation.

Firstly, it will mean establishing whether the employer has contractually agreed with the employee that the employee must retire at a certain age. Usually this will be contained in an employment contract concluded between the parties or in the terms and conditions of service of the employer. There have been instances where employers have sought to rely on the rules of a pension or provident fund applicable to the workplace and which contains a stipulated retirement age as support for their retirement age. However, this should be approached with caution as such a reliance is subject to unique circumstances including whether the retired employee was a member of such a fund and whether any contractual obligations existed which confined the employee to a specific pension or provident fund or not.

In the absence of an agreement between the employer and the employee on a specific retirement age, it will need to be determined what the “normal retirement age” of the employer company is, which will depend on the circumstances of the employee’s position and other relevant factors as discussed below.

The Labour Relations Act determines that a dismissal based on age is not automatically unfair if the employee has reached the normal or agreed retirement age. But without an agreement on the retirement age the fairness of the point at which employment stops may be disputed and could constitute grounds for unfair discrimination based on age should the employee be dismissed. This means that an employer bears the onus to prove that the dismissal was fair, which, if not successfully done, may lead to a decision of the dismissal being automatically unfair and the employee being awarded compensation of up to 24 months. 

For an employer to prove its “normal retirement age” our courts have agreed that the employer must show that it is an age which corresponds to and is applied to employees in a similar category as that of the person whose dismissal is in question. In addition to this, it has also been stated in our courts that the retirement age becomes the norm, if employees have been retiring at that age sufficiently long enough that it can be said to be the norm for employees to retire at that age in that particular employer company. 

In the case of our client who is 59 years old as per the above enquiry, it would be important to ascertain whether her employment contract or conditions of service determines that the retirement age of her employer company is 60 years. If there is no clear indication of an agreement to such a retirement age, one will have to assess whether the normal retirement age of the employer is in fact 60 years. If this is the case, the employer will have grounds to insist on her retirement at 60 years of age, but if not, the employer could be found guilty of an automatically unfair dismissal should it insist on her retirement at 60, based solely on her age?

One can therefore see that there are a number of issues that need to be borne in mind.

We advised her that she should also note that irrespective of your employer’s retirement age, she was still free to negotiate with her employer to remain in employment beyond the employer’s retirement age, and this can be suggested as an option to consider should your employer’s retirement age be established as being at 60.

Of course, this is then a negotiation and the employer cannot be forced to accept your continued employment beyond its retirement age and may also attach conditions to such acceptance of continued employment; but might be prepared for example to keep her on in their employ on a short term contract basis.

If you have a similar situation; it would be prudent to consult a labour specialist to assist you with advice regarding your employer’s retirement age, and to make representations on your behalf to your employer for the terms of any continuing employment following your retirement. Employers are also advised to take care to review their company retirement age and ensure that such is specifically included in its employment agreements and conditions of service to ensure certainty for staff of the company’s retirement age, and so avoid disputes arising.

Please visit our website at www.legaladviceoffice.co.za or send us an email to This email address is being protected from spambots. You need JavaScript enabled to view it. and we will respond to your legal queries within 48 hours.

About our author:

Hugh Pollard (Legal Consultant), has a BA LLB and 42 years’ experience in the legal field. 22 years as a practicing attorney and conveyancer; and 20 years as a Legal Consultant.

082-0932304 (Hugh’s Cell Number)

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.legaladviceoffice.co.za

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