The Employment Equity Act
Retirement age and dismissals in South Africa.
After decades of working, you might start to think about retirement as you get older. However, you are not always sure what the actual retirement age is that will apply. On the other hand, you might reach the retirement age and wonder if your employer can force you to retire despite you still wanting to continue with work. This article looks at the public and private sectors in terms of how the retirement age is determined and whether one can be dismissed upon reaching a certain age.
It is important to first and foremost understand that the Employment Equity Act 55 of 1998 prohibits the discrimination of a person on the basis of their age. Furthermore, the general rule is that a dismissal purely based on an employee's age is considered to be automatically unfair under the Labour Relations Act 66 of 1995 (“LRA”). However, this does not mean that an employee can continue working after a certain age and be protected from unfair dismissal based on their age.
Section 187(2) of the LRA contains an exception to the automatically unfair dismissal based on age and provides that an employee can be dismissed if they have reached the agreed retirement age. This exception, through reference to an agreed retirement age, already hints that there is nothing stopping employers and employees from entering into an agreement or having policies to regulate the retirement age.
Is there a general retirement age that applies to everyone?
South Africa does not have a standard retirement age that applies to everyone, but there are mechanisms in place for managing retirement. There is a difference between the public sector and the private sector.
The retirement age for employees who are in the public sector, in other words, those employed by the government, is regulated by the Public Service Act 103 of 1994 (“PSA”) and the rules of the Government Employees Pension Fund (“GEPF”). In terms of the PSA, the general retirement age for a public servant (other than educators and those in the State Security Agency) is 65 years, with the possibility of early retirement at the age of 55. With regard to educators and State Security Agency employees, the retirement age is from 60 to 65 years.
Employees in the private sector are regulated by the employment agreement, which means that the retirement age can be agreed to between the employer and employee. In practice, the general agreed to retirement age can range between 60 and 65. Upon reaching the agreed retirement age, an employee's services may be terminated. In an instance where there is no retirement age stipulated in the employment agreement, the employee cannot be forced to retire arbitrarily. The employer would have to either negotiate with the employee for them to retire or prove that the employee has reached the standard retirement age in that industry.
What if you work beyond the relevant retirement age?
It sometimes happens that an employee continues working beyond the agreed-upon retirement age. This may pose the question whether the employment agreement stipulating the retirement age falls away and is replaced by a new tacit employment agreement in which the retirement age no longer applies.
The Constitutional Court recently made a ruling on a matter with similar facts, however, the Constitutional Court judges could unfortunately not reach a unanimous judgment. Some of the judges ruled that to dismiss an employee based on the age of retirement after allowing them to work beyond that age would be automatically unfair. The other judges ruled that an employee may be fairly dismissed based on the retirement age either at the time they reach the age or any later date, as long as they are given reasonable notice and the employer has not waived the right to dismiss based on age. Until the Constitutional Court provides a clear view, the position which has prevailed over the years is likely to remain, which is that an employee may be dismissed based on age at any point after they have reached the retirement age.
In conclusion, it is important to ensure that you have a clear understanding of when you can retire based on either the provisions of the GEPF or your employment contract. This is more vital in the private sector where there is no general retirement age provided for in legislation. When you enter into an employment agreement, make sure that you negotiate or understand the retirement age to avoid any unforeseen disputes or dismissals when you reach a certain age.
Did you know… A dismissal purely based on an employee's age is considered to be automatically unfair, except where the employee reached the agreed-upon retirement age.