Section 185 of the Labour Relations Act (‘the LRA’) provides that every employee has the right not to be unfairly dismissed or subjected to unfair labour practices. An unfair dismissal occurs when an employee’s employment contract is terminated without good reason or adherence to fair procedure.
To that end, section 187(1) of the LRA lists various forms of automatically unfair dismissals, including terminating an employee’s contract because they participated in a legal strike, or for reasons related to their pregnancy. In addition, terminating an employment contract based on age – among other grounds, such as race, gender, or ethnicity – constitutes an automatically unfair dismissal.
Section 187(2)(b) of the LRA, however, creates a crucial exemption. It provides that ‘a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.’
Although there is no prescribed retirement age under South African law, employers generally specify an agreed retirement age in employment contracts or policy documents. Depending on the nature of an employee’s work, a ‘normal’ retirement age is deduced from reference to standard practice. The LRA thus permits an employer to dismiss an employee once they have reached the agreed or normal retirement age.
Although the courts have grappled with the correct interpretation of section 187(2)(b), recent case law clarifies that an employer may dismiss an employee at any time after they have reached the agreed or normal retirement age. Importantly, however, the dismissal of an employee for reasons connected to operational requirements – or otherwise unrelated to their age – will not fall within the scope of the provision and likely constitute an unfair dismissal.
For expert legal assistance in labour and employment-related matters, contact our specialists at labour@stbb.co.za.
