1.   INTRODUCTION

1.1    In a recent Labour Appeal Court (“LAC”) decision the long-standing deliberation of reaching retirement age and working beyond retirement age was again placed in the spotlight [Motor Industry Staff Association & Another v Great South Autobody CC (LAC) JA68 2021].

1.2    Section 187 of the Labour Relations Act (“LRA”) was scrutinised in comparison to prior case law to determine the position and the consequences of an employee rendering his/her services beyond reaching the agreed retirement age.

2.   CONSIDERATION OF THE LAC JUDGMENT

2.1    From the LAC decision it appears there are two scenarios which must be considered when an employee reaches the stipulated retirement age.

2.2    The first scenario arises where the employee reaches the stipulated retirement age, however, remains in the employment of the employer with no interruption to his/her services.

2.3    The second scenario arises where the employee reaches the stipulated retirement age and enters into a new employment agreement (generally in the form of a Fixed Term Agreement) to regulate the employee’s employment post retirement.

2.4    The main issue for consideration is whether an employee, working beyond the stipulated retirement age with no interruption to his/her services, can be “retired” (and effectively terminating the employee’s services) at any point thereafter on notice on the basis that s/he reached the stipulated retirement age in terms of his/her employment contract and whether such termination would constitute an unfair dismissal. 

2.5    The current position taken by the LAC appears to be as follows:

2.5.1   Where an employee continues to render his/her services uninterrupted after reaching the stipulated retirement age and no new employment agreement is entered into between the employer and employee, the employee continues to render his/her services in terms of the current contract of employment. The legal consequences are that the employer is then armed with the option to terminate the employee’s services at any time, on notice, on the basis that the employee has reached his/her retirement age in terms of the contract of employment.  This would not constitute an unfair dismissal based on discrimination on the grounds of age as provided for in Section 187 of the LRA.

2.5.2   Where an employer and employee enter into a new employment agreement post retirement age, the employment relationship post retirement age will then be regulated in terms of the provisions of the new agreement and the employer is then obliged to follow the terms of such new agreement when terminating the employee’s employment and/or see the employment agreement through until its conclusion.

2.6    In both scenarios there is a requirement for an employer to consult with the employee to discuss the employment relationship and how it will be regulated post retirement. 

3.   CONCLUSION

Employers and employees are advised to consult when an employee reaches the stipulated retirement age and continues to render his/her services to ensure that both parties are aware how the employment relationship will be regulated moving forward. 

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THIS UPDATE DOES NOT CONSTITUTE LEGAL ADVICE AND DOES NOT PURPORT TO BE A DETAILED OR COMPLETE EXPLANATION OF THE SUBJECT MATTER. SHOULD YOU REQUIRE LEGAL ADVICE OR WISH TO TAKE STEPS IN RESPONSE TO THIS SUMMARY, YOU ARE ADVISED TO CONTACT A QUALIFIED PROFESSIONAL.