Employment & the Recognised Retirement Age – Part II

Previously, in Employment & the Recognised Retirement Age – Part I

(Missed part I? Never fear – Click here!)

Being a diligent, law-abiding company, the employer has dotted all the i’s and crossed all the t’s. Or, more specifically, has recorded the noble age of 60 as being the official retirement age, in both the employee’s Employment Contract, and, for good measure, in the company’s Policies and Procedures. The whole department is all-a-twitter as the finishing touches are finalised for the “surprise” 60^th birthday-slash-retirement party. Already the date has had to be changed – twice. The original date clashed with the birthday boy’s annual trip to the coast, and moving the date of the party proved easier than asking the organisers to reschedule the Comrades Marathon. The second date that was mooted fell slap-bang in the middle of his wife’s birthday present to him: a trip to Tanzania so that he could fulfill his life-long dream to climb Kilimanjaro.

There was a time when the ripe old age of 60 was considered over-the-hill, ancient, past-their-sell-by-date, prehistoric, and – well – old! Times have indeed changed. Whether it’s as a result of all the organic veges, free-range-hormone-free-chickens, multi-vitamins, wheat-grass smoothies, red wine, Diamond status Vitality memberships, SPF 100, daily aspirins, or maybe, just maybe, the not-inconsequential medical advancements of the past century, one thing is clear: 60 is almost certainly the new 40. Many a 60-year-old retiree will find that, on his/her eventual death-bed, s/he would have spent in the region of one-third of his/her life “retired”. Not surprisingly, this is not a prospect that appeals to many a 60-year-young employee. Never before has 60 been so young, fit, vibrant and healthy. An added observation in the mix of things is that there are also many 60-year-olds who would actually like to retire, but for various personal reasons are unable to.

This poses an interesting dilemma for employers.

Youth versus Experience

An employer’s strict enforcement of its out-with-the-“old”-in-with-the-new retirement age policy potentially means the loss of experience, wisdom, knowledge and skill, all encompassed in a mature, proficient staff member who’s willing and able to put in many more years of work. Forcing a competent, capable employee to leave for no reason other than dogged compliance with the company’s official stance on the age of retirement could prove expensive on the part of the employer, who now finds itself having to incur the expense and frustration of recruiting and training a new, inexperienced, younger replacement.

Business Needs

Another consideration is that if the soon-to-be-retired employee’s date of retirement happens to fall in the middle of an important project, the employee can’t exactly delay his birthday in the interests of seeing the project through to fruition. If the employee comprises a key individual on the project team, forcing him into retirement merely to conform to a rigid company policy may not be ideal for any of the affected parties.

In answering this dilemma, let us return to Randall (see Part I). You may recall that the Labour Court ruled that there was indeed a company-recognised retirement age of 60. The Labour Appeal Court agreed. Yet here Randall was, aged 63 when the company finally notified him that his employment was being terminated on the basis of his age. In Randall’s case, his 60^th birthday happened to fall during the implementation of a critical project. Accordingly, when he turned 60, the company notified him that despite his having reached retirement age, his services were still required and that “the normal notice period would apply” in the event that the company wanted him to retire. Nearly three years later, once the bulk of the project rollout was complete, the company gave Randall one month’s notice of the termination of his employment on the basis of his age. Randall argued that, by virtue of extending his tenure, the company had lost the right to retire him on the basis of his age, and that the extension was for an indefinite period. The company counter-argued that, in its letter to Randall extending his services, they had expressly indicated that his services could be terminated on notice at any stage.

Long story short: the Labour Appeal Court determined that, on the facts of the case, the employer’s letter did indeed imply that the employer could sever the employment relationship at any stage on the grounds that Randall was of retirement age, and the extension of Randall’s employment was accordingly not for an indefinite period. The Labour Appeal Court also observed that Randall had every opportunity to reject the company’s condition that it could retire him at any time, and make a counter-proposal. But he didn’t. Which implied a tacit agreement to work beyond the official retirement age on the terms set out in the company’s letter. Randall’s dismissal by the company was accordingly not unfair.

The Solution

What does this mean for a company who doesn’t want to lose a skilled and competent resource, but simultaneously doesn’t want to lose the right to retire the employee in the future? If a company decides to retain the services of an employee who has reached retirement age, and assuming the employee is amenable to staying on, the company may do so. To avoid the possibility of future dispute in the matter, a prudent company should make it apparent to the employee that the extension of his or her services is not indefinite, and that his/her employment can be terminated on notice by the company. Alternatively, the company could consider setting a new retirement date for the affected employee.

Of course, disputes that come before our courts are all decided on the unique facts of each case. And nowhere is this more evident than in our labour courts. Accordingly, an employer is cautioned to follow a few simple rules:

• Make sure that a company-observed retirement age is established, preferably in writing.
• Make sure all employees are aware of and understand the company’s policy on the age of retirement.
• For the most part, stick to the retirement age. It forms a valuable precedent.
• But a company needn’t comply with the official retirement age so rigidly as to materially disadvantage the company.
• If an employee’s services are extended beyond the retirement age, make sure that this is specified in writing.
• In the event that the employee’s services are extended, set new, clear, unambiguous parameters on the employee’s retirement conditions, in writing.

P.S. Did we mention that everything should be recorded in writing?

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.