Compulsory retirement: When is it age discrimination?

G&T_RetiredAge discrimination is an automatically unfair labour practice.  So if a dismissal is based on an employee reaching retirement age, the employer is going to have to prove that the employee has reached the employer’s “normal” or “agreed” retirement age.

In practice it must convince the court of two things:

  1. That it does in fact have a retirement policy in place, and
  2. What that policy is.

In an illustrative case recently before the LAC (Labour Appeal Court), the facts were these:

  • A Group Financial Director was informed when he turned 60 (the company’s retirement age) that his employer wanted him to stay on, and that “the normal notice period will apply in the event that we would like you to go on retirement”.
  • Two years later he was given notice to retire.  This amounted, the parties agreed, to a dismissal based on the employee’s age.
  • He took the matter to the Labour Court claiming to be entitled to work until 65.
  • The Labour Court awarded him maximum compensation of 24 months’ remuneration, holding that the dismissal was automatically unfair.

The LAC disagreed, finding instead that the employee had “tacitly agreed to work beyond the normal retirement age and left it to the [employer] to determine the retirement age or date on notice to the [employee]”.  There was, held the Court, nothing unfair or unlawful in that.

Employers: Take advice

Avoid doubt and costly dispute (the cost to you could be high – our courts take a particularly dim view of “automatically unfair” labour practices).  Take advice on steps to secure and clarify both your position and that of your employees.  For example:

  • Have a clear retirement policy in place,
  • Stipulate a compulsory retirement age upfront in all new employment contracts,
  • If your existing employment contracts don’t stipulate a retirement age, negotiate one now (it must be negotiated – you cannot unilaterally impose a new term like this on employees),
  • Either specify upfront a procedure to be followed if an employee is asked to stay on after reaching retirement age, or take advice at the time on a new agreement to avoid uncertainty and the potential for litigation.

Employees: Your rights 

Don’t take any form of discrimination lying down – our law protects you from unfair discrimination, direct or indirect, “on any arbitrary ground, including, but not limited to race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility.”

© DotNews, 2005-2013. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.