DISMISSAL AFTER RETIREMENT AGE FAIR

06 May 2021

The question of whether it is fair to dismiss an employee after the employee has reached retirement age has once again been the attention of our Courts.

In the 1998 judgment issued by Justice Zondo (yes, the same one chairing the present Zondo Commission), the learned judge issued a judgment on this subejct.

That judgment concerned the matter of Schweitzer v Waco Distributors (A Division of Voltex (Pty) Ltd (1998) 19 ILJ 1573 (LC).

At issue was the application and meaning of Section 187(2)(b) of the Labour Relations Act (Act 66 of 1995). That section states:-

“(b) a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.”

Justice Zondo had to decide if the dismissal of an employee after the employee's normal retirement age has been reached was fair in terms of Section 187(2)(b). The employee had continued working after reaching the employer's normal retirement age. A few years later, the employer terminated the employee's employment without a hearing.

The judge stated that to make the dismissal fair, there must be three (3) factors present:-

“(a) the dismissal must be based on age.

  1. the employer must have a normal or agreed retirement age for persons employed in the capacity of the employee concerned;
  2. the employee must have reached the age referred to in (b) above.”

Simply put, Justice Zondo stated that he could find nothing in the LRA which required an employer to follow a fair procedure prior to dismissing an employee who was still in the employer's employ after he reached the relevant normal retirement age.

This is in stark contrast to Section 187(1)(f) which states that a dismissal based on age is automatically unfair.

Now we have a Labour Appeal Court judgment which also addresses the dismissal of an employee over no normal retirement age.

The judgment is that of Barrier v Paramount Advanced Technologies (Pty) Ltd (JA35/2020) [2021] ZALAC 6 (18 February 2021).

Barrier, the employee, had reached the company's normal retirement age of 65 but had continued working as usual. Four (4) years later in 2017, the company embarked on a retrenchment exercise. Perhaps the company was unaware of the Schweitzer v Waco Distributors judgment.

Barrier volunteered to be retrenched. The company paid him a severance benefit of one (1) week's remuneration for each of the four (4) years that he had remained in the employer's employ after the retirement age of sixty-five (65).

Barrier said no I have been in your employ continuously since 1985, and that is thirty-two (32) years. Barrier argued his severance pay should be based on his thirty-two (32) years' continuous service and not the four (4) years since retirement.

The Court took into account Section 41(2) of the Basic Conditions of Employment Act (Act 75 of 1997). That section states “continuous service” must be counted in calculating severance pay.

Barriers had continuous service from 1985 until he was retrenched in 2017, so he had to be paid for the thirty-two (32) years he had been in the company's employ.

The Court stated that it was immaterial whether Barrier had received or had not received retirement benefits at sixty-five (65).

What was important was whether or not Barrier had been in the Company's employ continuously from 1985 to 2017, i.e., thirty-two (32) years. The lesson for employers is to be very careful as how post-retirement employees are employed and dismissed.

Compiled by Les Owen

CONSTRUCTIVE DISMISSALS

03 December 2020

Readers may be interested in the subject constructive dismissals.

A constructive dismissal arises when an employee resigns because the employer made the employee's continued employment intolerable.

Much has been written about exactly what is meant by the words “intolerable”.

Intolerable means that the condition created by the employer were such that the employee had not other option than to resign.

If the employee resigns because the employer tells the employee to attend a disciplinary hearing, that is not a good enough reason for the conditions to be described as “intolerable”.

If an employee is given a work instruction which the employee decides is unreasonable, that is not normally something which fits in with “intolerable”. Even if such instructions continue, the employee can put in a grievance or refer the matter to the CCMA.

To succeed at the CCMA, the employee must show that the conditions created by the employer were so unpleasant, so unbelievable, so onerous, that the employee had no option but to resign.

The cases that support this view are:-

  1. National Health Laboratories Service v. Yona and Others 2015 36 ILJ 2259 (LAC)
  2. Gold One Limited v. Madalani & Others (JR 1190/15) 2020 ZALCJHB 180, 9 September 2020
  3. Chabeli v Commission for Conciliation, Mediation and Arbitration and Others (JR2241/08) [2009] ZALC 126 (22 December 2009)

Compiled by Les Owen