Retirement – Most people believe that everyone has to retire at age 65.

In fact, the South African pension age is now 60, so people who are eligible for a state pension can actually contact SASSA and make appropriate arrangements when they turn 60.

There are certain basic requirements that SASSA will inform you about.

Can you be retired if there is no policy governing retirement?
You should also be aware that sometimes employers have no right to enforce a retirement. In the case of Deon Bos v EON Consulting (Pty) Ltd, the employee claimed automatically unfair dismissal based on age against his erstwhile employer, who terminated his employment in June 2014 after he had surpassed their “normal retirement age” of 65. A long history went before this unfair termination.

He was employed with them in 2003 after completing a stint of consulting for them before that. No written agreement was entered into regarding his employment. In 2010, the company introduced an insurance product for its employees to cover things like life cover and funerals. This policy would become invalid after employees turned 65. The company paid the contributions to this as well as to a Retirement Annuity Fund that it sponsored for employees. The retirement age on this RA was, at a point, extended for the employee to age 70.

In 2013, the company introduced a Pension Fund, and the employee elected not to join it, but to continue his membership of the RA. Other employees were also given the option of joining the Fund or not. The retirement age on this Fund was 65. At this point, the employee had already reached and gone past the age of 65, but no discussions with him about retirement were held.

It also introduced new rules and regulations governing employment over time, revising these on several occasions. Interestingly, the Handbook never contained a retirement age.

However, in March 2014, he received a letter informing him that the company intended for him to retire in 3 months time, end June 2014. He made his objections known and various discussions and correspondence ensued, but to no avail. He left the company at the end of June 2014 and referred a dispute through the CCMA and ultimately the Labour Court.

The Court found, in August 2016, that the employer had not acted fairly and had unfairly terminated the employee’s services because there was no policy in place at the time of hiring him and no consultations took place in regard to the retirement age which was introduced in 2014. Regardless of this, the employee was never a member of the Fund on which the retirement age was 65 and after he surpassed that age, no mention was made of it. The arbitrary retirement was patently unfair and the employee was awarded 14 months salary which the court assessed as just and equitable.

What do we learn from this?

• Clearly communicate the company’s retirement age – put it in your written particulars of employment, in the employee Policies and Procedures and remind your employees on a regular basis of it.
• If you allow your employees to work after retirement age, then be sure they know it cannot be a permanent arrangement and you will make the ultimate decision as ot when the employment will terminate (fairly).
• Retirement Age might be fixed in a benefit scheme such as Provident or Pension Fund, but this does not apply to people who are not members of the Fund or people employed prior to the advent of such a scheme, unless they specifically agree in writing to these terms. It must also be applied consistently to people reaching retirement age.
• You can never implement a retirement age retrospectively.