In Motor Industry Staff Association v Great South Autobody CC t/a Great South Panel Beaters (JA68/21) the Labour Appeal Court had to determine whether the dismissal of Mr Landman, the second appellant, was automatically unfair as it was based on his age and thus amounted to unfair discrimination in terms of section 187(1)(f) of the Labour Relations Act 66 of 1995 (LRA).
In terms of section 187(1)(f) of the LRA, a dismissal is automatically unfair if it relates to an employee’s age. However, in terms of section 187(2)(b), a dismissal based on age is fair if the employee has reached the normal age or agreed retirement age for persons employed in that capacity.
In determining whether a dismissal in terms of section 187(2)(b) is fair, the following factors are considered: 1) whether the dismissal is based on age; 2) whether the employer has an agreed or normal retirement age for employees employed in the capacity of the employee concerned; and 3) whether the employee has reached the normal or agreed retirement age.
According to the written employment contract between Mr Landman and his former employer, the respondent, the retirement age was 60 years. When he reached the age of 60, he was not retired and he continued to work.
Approximately nine months after he reached retirement age, the employer informed Mr Landman it was terminating his contract of employment as he had reached retirement age.
Mr Landman argued inter alia that when the employer failed to retire him when he reached the retirement age, it waived the right to rely on the retirement age in his contract, alternatively a new contract came into existence which did not contain a retirement age, or at minimum the new retirement age is 65 years. Mr Landman belonged to the Motor Industry Provident Fund and according to its collective agreement the retirement age is 65.
In reaching its decision, the Labour Appeal Court considered the interpretation of section 187(2)(b) of the LRA.
The Labour Appeal Court held that the correct interpretation of section 187(2)(b) of the LRA affords an employer the right to fairly dismiss an employee based on age at any time after the employee has reached the agreed or normal retirement age.
The court held further that in circumstances where an employee continues working uninterrupted after the employee reaches retirement age, the employment relationship and contract continue. Therefore, the retirement age remains the same.
In addition, the court held that section 187(2)(b) of the LRA does not contemplate a new tacit contract or envisage a tacit amendment of the contract to the effect that an employee would continue to work indefinitely or that a new retirement age applies.
The Labour Appeal Court held further that where an employer expressly permits an employee to work beyond the agreed or retirement age, it does not constitute a waiver of the right to dismiss in terms of section 187(2)(b). This is the same position even if the employer fails to take any steps, unless it can be inferred from the clear and unequivocal conduct of the employer that it waives the right to dismiss an employee who has reached retirement age.
Based on the facts of the case, the Labour Appeal Court found that the employer did not waive its right to dismiss Mr Landman when he reached retirement age or that there was a tacit agreement permitting Mr Landman to continue working indefinitely or until he reached the age of 65.
The appeal was accordingly dismissed.
This case highlights that if an employee continues working beyond retirement age it does not necessarily mean his/her employment will be indefinite or that a new retirement age is agreed. This means that an employer may fairly terminate an employee’s contract of employment on the basis of age even if they have worked beyond retirement age.
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