Employment & the Recognised Retirement Age – Part I

  Life ain’t what it used to be. In days gone by…. (cue the sepia scene, gently time-faded, slightly torn around the edges) when you finished school – loosely speaking, as a matric wasn’t necessarily a prerequisite for many careers – you were generally expected to enter the workforce. A popular starting point would have been to arrange a job interview with your bank manager. A mere courtesy of course, as he would have known you since you were but knee-high to a grasshopper. If all two bank-teller positions were already filled, his vast knowledge of the local businesses meant he could steer you in the right direction. Perhaps the local supermarket needed a new packer, or a nearby factory was searching for an apprentice. Once installed in your new position, you put a little elbow-grease into it, mixed with a healthy measure of honesty, enthusiasm, pride, tenacity, deference, respect for your superiors, and more than a solid dose of loyalty… and before you knew it, 40+ years had passed, by which time you had steadily worked your way up the proverbial ladder, and now found yourself in the respectable, not-to-be-sniffed-at position of Supervisor. Maybe even Manager. Around about which time you looked forward to cutting your 60^th birthday cake, baked by the pastor’s wife (who doubled as the company’s receptionist), and receiving a golden handshake, engraved pen, and a huge “Good Luck on your Retirement” card personally autographed by everyone in the company. Time to go home and spend your well-earned retirement doing crosswords, playing bowls, and bouncing grandchildren on your knee. Sound familiar? Nope? That’s because things have changed a little since then. Okay – a lot. The modern company needs to be slightly more circumspect about that 60^th birthday party. Slipping a note into the birthday card thanking the birthday boy-or-girl for the years of service, and simultaneously setting out the company’s pension payment process could well land said company in no small spot of bother. Regardless how well-meaning the note may be.

Retirement Age

Section 187(2)(b) of the Labour Relations Act states: “A dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.” Accordingly, the question to ask before summarily retiring an employee is this: Does the company have a “normal or agreed retirement age”? Put another way: is there some form of an agreement or generally observed arrangement in place specifying the age that the employee is expected to retire? An agreement can typically be recorded in one or both of the following labour documents: Employment Contract: an obvious but commonly-overlooked place to record the employee’s retirement age is in the employment contract. This way there’s little chance that the employee can challenge the termination of his/her employment on the basis that “I didn’t know.” But a general note if this route is followed: ensure that some semblance of standardisation is applied across the company's employment contracts. This is to avoid the undesirable scenario of one employee being employed with ‘60’ as the retirement age, the next as ‘65’, and another negotiating ‘70’. If a company is seen to be applying varying, arbitrary retirement ages, it could open itself to challenge if it’s unable to defend these variances. Company Policies: another place to record the company’s official retirement age policy is in the company’s written policies and procedures. If this is the case, the employer needs to ensure that these policies and procedures have been communicated and are available to all staff. If the board of 30-something year old directors have unanimously determined 60 as the official age of doddery-ness, and the HR manager dutifully records this decision in the neat, ring-bound file kept locked away in her filing cabinet, it should come as no surprise when the next 60-year-old to get the chop takes up the fight in the CCMA. Recording the Company’s retirement age in the Employment Contract templates and Policies and Procedures is probably the simplest and most common approach, and least likely to expose the company to challenge. But these are not the only ways to establish the official retirement age. In one case*, the Labour Appeal Court was called on to determine whether there was a recognised retirement age in the company. In this case, the employee, 63-year-old Randall (no – not he of Idols notoriety) argued that his dismissal was unfair. His employer countered that the company’s normal retirement age was 60. There was no retirement age specified in the employment contract, nor was there a formal, written Retirement Age Policy in the company. However, the company’s provident fund rules fixed the normal retirement age as 60. Given that Randall was the company’s financial director, and was one of the provident fund’s trustees, the Labour Court ruled (and the Labour Appeal Court agreed) that Randall clearly would have known of the company’s recognised retirement age. Added to this, there was an established precedent within the company, in that majority of its employees were retired at the age of 60. So, that settles it then. Set the company’s recognised retirement age at 60. Record this in the company’s Employment Contracts and Policies and Procedures. And slip a compilation of crossword puzzles into the employee’s gift-pack at his/her 60^th birthday-slash-retirement party. Except that our story doesn’t end here. And neither does Randall’s. Stay tuned for the next part of the Labour Appeal Court’s ruling.

To be continued…..

* Karan /ta Karan Beef Feedlot v Randall [2012]

Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.