Will dismissing an employee who has reached the retirement age be fair? Or would it come down to an automatically unfair dismissal in terms of Section 187(1)(f) of the LRA?

South African labour laws lack a specified retirement age, and terminating an employee based on age may violate Section 187(1)(f) of the Labour Relations Act (LRA), which deems dismissals automatically unfair for arbitrary reasons such as age discrimination. Such dismissals can carry significant financial repercussions for employers. However, an exception is outlined in Section 187(2)(b) of the LRA, stating that a dismissal based on age becomes fair once an employee reaches the “normal or agreed retirement age in that capacity”.

A recent case, Seokwane v Bidvest Prestige Cleaning Services (Pty) Ltd JS1040/20 [2023] ZALCJHB 313 (8 November 2023), revolved around determining the fairness of the Applicant’s termination due to reaching the agreed retirement age.

The Applicant alleged that her dismissal by Bidvest Prestige Cleaning Services constituted an automatically unfair dismissal based on age, as per Section 187(1)(f) of the LRA. Bidvest defended the termination, asserting that it was fair after the Applicant reached the agreed retirement age of 60 and was based on operational requirements.

The background to the dispute reveals that the Applicant, initially employed by Sanmac and Tsebo (Pty) Ltd in 2002, worked at Volkswagen Group SA (VW). In 2019, Bidvest took over the cleaning contract from Tsebo, employing the Applicant under a fixed-term three-year contract. A year later, VW downsized Bidvest’s staff, leading to the Applicant receiving one month’s retirement notice. The manner of retirement conflicted with fair retirement practices, as the Respondent failed to provide sufficient notice, violating the Applicant’s right to prepare for retirement.

Moreover, Bidvest breached its retirement policy by hiring the Applicant at the age of 62, despite the contract stipulating a retirement age of 60. Bidvest justified this deviation by claiming it succumbed to VW’s persuasion. The Labour Court found Bidvest’s conduct inconsiderate of the Applicant’s vulnerability and ruled that her dismissal was automatically unfair based on age discrimination. Bidvest was ordered to compensate the Applicant for 12 months.

South African labour law prohibits unfair dismissal based on arbitrary grounds, including age. The case of Seokwane v Bidvest Prestige Cleaning Services exemplifies the importance of adhering to fair retirement practices and the consequences employers may face if found in violation of such regulations.

Written by Tammy Koekemoer, Dispute Resolution Official at Consolidated Employers Organisation (CEO SA)