Retiring Your Employees – Making The “Mature” Decision

In South Africa, there is currently no legislated retirement age, although it is commonly accepted that one should retire between the ages of 60 to 65 years.  

However, an employee cannot be forced to retire unless one of two situations arises. The first is where the retirement age is stipulated in one’s employment contract; the second is where there is a company policy prescribing a specific age for this. An employee may therefore work for as long as they are capable unless there is an agreed retirement age.  

The retirement age or date must be agreed upon between the employer and the employee if there is no agreement in place, and this cannot be changed unilaterally. 

Consequently, dismissing an “aged” employee without an agreed retirement age would constitute an automatically unfair dismissal because it is considered unfair discrimination based on age (i.e. agism) as per Section 187(1)(f) of the Labour Relations Act (LRA). 

An employer will have to establish whether it has a defence to an employee’s claim for unfair dismissal based on agism by looking at Section 187(2)(b) of the LRA, which states: “A dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.” 

Also, if an elderly employee is no longer capable of performing their duties due to their advanced age, then a dismissal will be fair if an employer follows the proper procedures relating to incapacity. 

As a way of avoiding unnecessary disputes surrounding an employee’s retirement age, it is recommended that a written agreement exists between the parties to this effect. The simplest way to do this is by way of an employment contract with the inclusion of a retirement clause.