Since many people these days are working longer, the question of when an employee has an obligation to retire is becoming an increasingly hot topic.
Employees are generally required to retire at a certain age based on a variety of factors, including their industry and their employer’s rules and policies.
Often, employees are aware of when they must retire, and then plan accordingly, so that they have adequate financial resources to cover their expenses after they stop working. Retirement ages may be stipulated in an employee’s contract or may well be imposed by a company’s retirement policy.
For employers, it is crucial to have clear policies regarding when employees need to retire so that there are no ambiguities.
Case Law – BMW South Africa and the National Union of Metalworkers of South Africa.
The question remains, what are the consequences for an employer who does not consent to the employee’s retirement age being changed? Does that constitute an automatic wrongful dismissal due to age discrimination?
Karl Deppe brought this issue to the Labour Appeal Court in the case between BMW South Africa and the National Union of Metalworkers of South Africa.
According to Deppe, his retirement age was changed from 65 to 60, but he hadn’t consented to the change because he had not received an election form indicating whether he was prepared to retire at 65 or 60.
He argued that BMW unfairly discriminated against him by making him retire at 60 years of age when he believed that his agreed retirement age was 65, alleging he was dismissed within the meaning of Section 187(1)(f) of the Labour Relations Act (“the LRA”).
BMW was under the obligation to prove that Deppe’s dismissal was not the result of unfair discrimination based on his age in the trial court.
According to BMW, they terminated Deppe under Section 187(2)(b) of the LRA, not because he was old, but rather because he had reached the normal retirement age for the industry.
Nevertheless, the Labour Appeal Court declared Deppe’s dismissal as automatically unfair.
Retirement and Covid-19
In the wake of the COVID-19 pandemic, many organizations have experienced extensive restructuring, and, in many instances, employees who had reached retirement age could not legally be terminated from their employment.
As a result of automatically unfair dismissal based on discriminatory factors including age, the Labour Court may well award up to 24 months of remuneration as compensation, to employees who were dismissed based on the employer’s argument that the employee reached his/her normal retirement age. Which argument was not accepted by the trial court.
In these difficult economic times, employers are urged to include clear provisions in an employee’s contract of employment that regulate the employee’s particular retirement age so that they won’t face uncertain and unnecessary litigation.
From the BMW judgment, one can also learn that employers can amend or alter the retirement age of employees by using the appropriate degree of care, and the employer must have documentary evidence/records of the amendment.
