Dismissal on the grounds of age is automatically unfair unless the employee “has reached the normal or agreed retirement age for persons employed in that capacity” (section 187(2)(b) of the Labour Relations Act, 1995).
If the parties agree upon the retirement age in the employment contract, the employer may require the employee to retire when they reach that age. Of course, the employer may decide to extend the duration of employment.
If an employee reaches retirement age but continues to work beyond that age, there is no legal certainty regarding the rights of an employee who works beyond that age. It is thus advisable for the employer and employee to clearly define the terms of employment after the retirement age, for example, how long the employee will continue to work and what notice is required to terminate the employment. Employers should be careful to amend the employment contract to stipulate the extended retirement date. Ideally, the employee should agree to the variation in writing.
If the employment contract does not stipulate a retirement age, then the employer cannot simply fix the age for retirement for existing employees. Trying to do so would be a unilateral change to terms and conditions of employment, which would have no legal effect.
If there is no mention of retirement age in the contract and there is no organisational norm, employees can continue to work until they cannot perform their normal duties. The employer can only terminate employment following labour legislation (that is, for misconduct, operational requirements or incompetence) and must follow the procedures set out in the contract and labour law. The courts have found that it is unfair for an employer to terminate employment just because of age.
To
avoid any uncertainty, it is vital that the employment contract specifies a
retirement age or that the agreement refers to a policy or retirement fund
rules that clearly state the normal retirement age.
