South Africa does not have a general retirement age. Section 187 of the Labour Relations Act renders dismissal based on age as automatically unfair. What to do when employees reach retirement age?
Keep in mind that the Labour Relations Act makes an important exception which indicates that it would be fair to end the employment relationship based on age “if the employee has reached the normal or agreed retirement age for persons employed in that capacity”. The normal retirement age of an organisation is determined when employees consistently retire at a specific age over a long period of time. Ensure that your employment contracts or policies clearly communicate the retirement age of your business. If this has not been done, employers should negotiate in advance with the applicable employee. Employers may not unilaterally impose a retirement age.
Although it is not a statutory requirement, it is best practice to notify employees timeously that they are reaching the retirement age. Remember, equitable and fair treatment is key. Terms and rules of pension funds (if employee is a member) should also be taken into consideration during retirement age negotiations and determinations.
The employment relationship may continue once the retirement age has been reach. The employer and employee may decide on a new retirement age for the employee, or they may decide on a fixed term contract.
Should employers be concerned that older workers lack capacity to perform their duties, the onus remains with the employer to prove this. Consider the benefits of older employees when worried about the perceived concerns. In 2013 the Department for Work & Pensions in the UK stated that older workers contributes towards a broader range of skills and experience, they provide opportunities for mentoring new recruits, they reduced staff turnover and improve staff morale.
Ensure thus that older workers (as with all workers) enjoy fair and equitable treatment and that their retirement is handled correctly. Contact sarie@bgrworcester.co.za for support with retirement or termination of employment.