Most folks contemplate retirement on the age of 60 or 65, however there could also be situations the place staff wish to, or need to, proceed working beyond retirement age. However, it is very important word that in the event that they do, they’re working on ‘borrowed time’.
The Labour Appeal Court not too long ago gave readability on the circumstances wherein an employer can terminate the employment of somebody who has reached the agreed or regular retirement age.
Chloë Loubser, lawyer within the dispute decision division of legislation agency Bowmans, says retirement age is usually agreed upon within the employee’s contract, the corporate’s coverage doc or the retirement fund guidelines.
In this case, the agreed upon retirement age was 60. The worker, a Mr Landman, remained within the make use of of the corporate, Great South Autobody, for 10 months after he reached the agreed retirement age.
Fair versus unfair dismissal
Landman was ultimately notified that he needed to retire and was given one month’s discover. He took the matter to the Labour Court, claiming he was unfairly dismissed.
In phrases of the Labour Relations Act, a dismissal based mostly on age might be routinely unfair (and represent unfair discrimination), except it may be proven that the worker has reached the conventional or agreed retirement age.
The courtroom discovered {that a} dismissal based mostly on age shouldn’t be routinely unfair in circumstances the place the worker “has reached” the conventional or agreed retirement age. In this case the worker had reached the agreed retirement age of 60, due to this fact his dismissal was honest.
The matter was taken on enchantment earlier than the Labour Appeal Court, the place Landman argued that the place an worker continues working after reaching the agreed retirement age and neither celebration depends on the truth that the retirement age was reached, a brand new (second) employment contract comes into existence.
Landman argued that it will be impermissible to depend on the preliminary retirement age since there was now a brand new contract in place.
The worker could be on the mercy of the employer if the employer depends indefinitely on the agreed age months or years after the age has been reached.
The enchantment courtroom disagreed with this argument and held that the act was clear and unambiguous – a dismissal is honest when the worker has reached the agreed or regular retirement age.
“Accordingly, where an employee continues to work for an employer uninterrupted after reaching retirement age, the legal position is now clear: the employment relationship and employment contract continue, and the agreed or normal retirement age remains unchanged,” explains Loubser.
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The wording
Talita Laubscher, companion at Bowmans, says the act expressly makes use of the phrases “has reached” the agreed or regular retirement age. It doesn’t say “reaches”, which might indicate that the employer can solely carry the contract to an finish on the actual date on which the worker reaches the agreed retirement age.
In decoding the phrases “has reached” the courts stated the employer could at any time thereafter require the worker to retire. Laubscher provides that when the employer does this, it ought to present an inexpensive time interval to the worker.
Landman was given one month whereas the Labour Court, in one other case, thought a interval of three months could be affordable, remarks Laubscher.
“Employees working beyond the agreed retirement age with no fixed-term contract in place or with no new retirement age agreed, can be required to retire at any time. This may come as a huge shock to the employee. Certainty is best for all concerned.”
Laubscher says if the worker continues to be in a position to correctly carry out their duties with out criticism, it’s advisable to discover both the conclusion of a fixed-term contract after reaching retirement age, or agreeing to a brand new retirement age with the employer.
Employment contract
Laubscher advises staff to verify their employment contracts to establish whether or not the contract incorporates a retirement age. If so, they need to interact with the employer sufficiently effectively upfront to agree on the best way ahead in the event that they want to proceed working beyond the agreed retirement age.
Allowing staff to work for a specified interval after they’ve reached the agreed retirement age could give employers alternative to make sure expertise switch which can serve essential operational functions.
“A transition phase between the agreed retirement age and the ultimate agreed retirement age or expiry of a fixed-term contract may accordingly be beneficial to both the employer and the employee,” says Laubscher.
If the employer needs to carry the employment contract to an finish due to a motive aside from the truth that the worker has reached the agreed retirement age, the employer should adjust to the ideas of a good dismissal, she provides.
Read: Early retirement comes at an enormous price
