Employer bound by retirement age in contract

South African law provides that it is unfair to dismiss an employee based on age unless he or she has reached the normal or agreed retirement age for a person employed in that capacity.

Employer bound by retirement age in contract

The Labour Appeal Court recently heard a case concerning the issue of retirement age. The questions that arose, reports the Daily Dispatch, were whether an employee can be compelled to retire and, if so, what age is regarded as the retirement age. South African law provides that it is unfair to dismiss an employee based on age unless he or she has reached the normal or agreed retirement age for a person employed in that capacity. The retirement age may have been agreed in the employment contract and then the employee can be required to retire when the specified age is reached. But if the age has not been agreed to, then the employer cannot simply fix the age for retirement for existing employees. Trying to do so would be a unilateral change to terms and conditions of employment, which would have no effect in law.

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Retirement age bound to contract or policy

Source http://www.dispatch.co.za

JOHANNESBURG – In a case that appeared recently before the Labour Appeal Courtthe issue of retirement age within an organisation was considered. The questions that arose were whether an employee can be compelled to retire and, if so, what age is regarded as the retirement age.

What happens when a company does not have an agreed retirement age but decides that it wishes to impose retirement when employees reach a certain age? Can the company decree that, from then on, that age will be the normal retirement age?

South African law provides that it is unfair to dismiss an employee based on age unless he or she has reached the normal or agreed retirement age for a person employed in that capacity. The retirement age may have been agreed in the employment contract and then the employee can be required to retire when the specified age is reached. But if the age has not been agreed to, then the employer cannot simply fix the age for retirement for existing employees. Trying to do so would be a unilateral change to terms and conditions of employment, which would have no effect in law.

The law creates only two bases on which an employer can justify the termination of an employee on the grounds of retirement. The one is agreed retirement age and the other is normal retirement age.

Employers would be well advised to specify the retirement age as part of the contract of employment. – DDC

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