Judgment upholds right to work

A landmark Labour Court judgement has challenged corporate retirement norms. | Freepik

A landmark Labour Court judgement has challenged corporate retirement norms. | Freepik

Published Mar 7, 2024



A RECENT judgment by the Labour Court confirmed the current untenable position that many working-class South Africans find themselves in: being unable to retire comfortably at the standard age, and thus having to work beyond retirement.

In Seokwane v Bidvest Prestige Cleaning Services, the Labour Court found that a general worker was discriminated against because of her age upon being dismissed by her employer. As a result, the dismissal was accordingly judged automatically unfair.

The employee was employed on a standard three-year fixed-term employment contract, even though they were already 62-years-old - which was over the stipulated retirement age (60 years) stated in the employer’s retirement policy. The court found that the true reason for the employee’s dismissal was based on the employer’s operational requirements, which meant that the employer was not able to use section 187(2)(b) of the Labour Relations Act (LRA) as a defence for its conduct.

Section 187(2)(b) of the LRA allows employers to be protected from claims of unfair discrimination on the grounds of age if the reason for, or proximate cause of the dismissal is that the employee has already reached the standard or agreed retirement age.

The court reasoned that the employee had been subjected to an automatically unfair dismissal (based on age discrimination), and should be compensated with an amount equivalent to 12 months’ remuneration at her rate of remuneration on dismissal.

Uncomfortable retirement

A recent report by 10X Investments citing figures provided by the National Treasury indicated that only 6% of South Africans are on track to retire comfortably. The report further identified that many economically active South Africans have not formally planned their retirement, and those who had were unsure whether they were on track to support themselves in old age. According to the report, various factors are to blame including the current economic climate, high interest rates and the impact of the Covid-19 pandemic.

Many employees, like the employee in this particular judgment, are in a similar situation because they envisage life after retirement as a period in which they will have to take up further employment to afford the cost of living.

Considered evaluation

Employers must therefore ensure they evaluate whether re-employing retired employees, or those who are approaching or have reached retirement age, constitutes waiving of the employer’s rights associated with employees reaching retirement age.

Employers cannot later rely on the stipulated retirement age as a reason to terminate their employment. This is because if the employee's termination was actually due to something other than reaching retirement age, they may be able to argue that they were unfairly discriminated against based only on their age.

Employers must ensure they stringently implement their retirement policies. If they deviate from the provisions in these policies, they must ensure that the employment agreements in respect of the specific employees, cater for the bespoke needs of the factual circumstances at hand.

* Visagie is a Partner; Jacobs is an Associate at Webber Wentzel