Dear Reader

Welcome to this week’s Labour Bulletin. I hope you all had a restful break over the long weekend.

Get it right with retirement

The Labour Court (LC) regularly hears cases about retirement, and it’s clearly an issue that continues to trouble employers. Make sure you get your process for retirement right.

The Labour Relations Act (LRA) says a dismissal based on age isn’t unfair if your employee has reached the agreed or normal retirement age. But employers frequently forget that they have to prove what is ‘normal’. For there to be an agreed retirement age both parties must agree to it. You can’t simply declare a particular age to be the retirement age and think it will automatically apply to all existing employees, no matter how long they’ve been there and what age they currently are!

Stipulate your agreed retirement age in your contracts

The best way to prove your agreed retirement age is to stipulate it in your employment contracts. But what if you haven’t done this? Can you introduce one and will it be binding on your employee? Don’t forget about the rule that a contract is concluded between two parties and to change the contract both parties must agree.

The employer in this recent Labour Court case did forget! You can learn many valuable lessons about retirement age from its mistakes.

Mrs Bedderson was employed as a teacher by the Sparrow Schools Education Trust just three months before she turned 65. Her contract said nothing about retirement age. She taught at the school for five years, rising to the position of head of department. The Trust then introduced a mandatory retirement age of 65, but said that current staff could remain on temporary contracts until they reached 70 years’ old. However, Mrs Bedderson had already reached age 70. She was told the Trust wouldn’t renew her contract.

She took the Trust to the Labour Court claiming automatically unfair dismissal and unfair discrimination.

You can’t dismiss based on age!

The LC agreed. It was clear the Trust had only dismissed Mrs Bedderson because of her age. When she was employed (just before she turned 65) it was on a permanent, not a temporary, contract. Even though the Trust had unilaterally introduced a mandatory retirement age this couldn’t alter the terms of her contract. It also could not have the effect of automatically terminating her contract.

Employers can’t unilaterally introduce terms that contracts will expire when a stated event occurs. Even if the employer could justify introducing a mandatory retirement age as an operational requirement (to ensure accreditation as an educational institution) it couldn’t use this as grounds to dismiss an employee who had already reached the retirement age when it was set.

Your dismissal will be automatically unfair

The LC ruled the dismissal to be automatically unfair. It didn't award Mrs Bedderson damages because she didn't prove what her damages were. However, she was awarded R42 000 compensation to be added to her pension when she did eventually retire.

Avoid these retirement problems by having properly drafted employment contracts in place. If your existing contracts don’t deal with retirement you can’t unilaterally change them. You must agree changes with your existing employees, or you’ll come off second best in Court.

Until next month...

Susan Stelzner

Editor-in-Chief
Labour Law for Managers Practical Handbook