Ivan Israelstam | Chief Executive | Labour Law Management Consulting | mail me |
Section 187(2)(b) of the Labour Relations Act (LRA) provides that a dismissal may be fair if the employee has reached the normal or agreed retirement age. This means termination based on the employee’s age might not constitute unfair discrimination if the employee has reached retirement age.
This distinction is important. It is crucial when considering dismissals that occur after an employee has passed retirement age.
What is unfair discrimination?
Unfair discrimination can take many forms. For example, when a manager unnecessarily sidelines an employee because he or she is disabled, the manager may commit unfair discrimination.
Sexual harassment also amounts to unfair discrimination based on sex. In addition, when an employer pays a worker less than colleagues because of their gender, the employer engages in prohibited gender discrimination. If a recruiter rejects a job applicant because the applicant is white, the recruiter may commit unfair discrimination on the grounds of race.
For instance, in Consolidated Billing vs IMATU (1998, 8 BALR 1049), the employer turned down employees for internal appointments because they did not fit the desired racial profile. The internal applicants had already reached the short list stage. The employer had acknowledged that they were suitably qualified. The IMATU arbitrator therefore found that the employer committed unfair racial discrimination when it failed to appoint them.
However, not all discrimination is unfair. For example, an employer may refuse to hire a person aged 14. This decision reflects age-based discrimination. It does not amount to unfair discrimination because the law prohibits hiring employees younger than 15. Outside of such legal requirements, when an employer discriminates against an employee or applicant simply because they are too young or too old, the employer usually commits unfair discrimination.
Post-retirement age dismissals, a grey area
The situation becomes more complex when employers allow employees to continue working after the normal retirement age. Employers often ask whether they must then allow these employees to stay until they pass away.
Section 187(2)(b) of the LRA appears to answer this question. It suggests that an employee who is 66 or 78, with a normal retirement age of 65, may face a fair dismissal because they have reached the normal retirement age. However, courts have struggled to apply this section consistently. This includes the Constitutional Court. The difficulty is especially clear in cases involving dismissals after an employee has passed retirement age.
In Solidarity vs SITA (Lex Info, 20 December 2024, Constitutional Court case number CCT 346 22), the judges could not agree on the meaning and application of this section. Six employees had passed their normal retirement age of 60. The employer allowed them to stay on. They agreed to a new retirement age of 67. However, SITA retired them before they reached 67. The employer argued that agreements should not override statutory provisions. The employer further argued that Section 187 permitted retirement at any time after 60.
The majority of judges found the dismissals automatically unfair. They ordered the employer to pay each employee 24 months of compensation. Even if the employees had earned only R20,000 per month on average, this award would have amounted to R2,880,000.
In conclusion
This outcome highlights that courts will not tolerate age-based mistreatment. It also reinforces the need for managers to understand the law when they handle dismissals after an employee has passed retirement age.
