BEWARE OF UNILATERALLY CHANGING AN AGREED RETIREMENT AGE.

Tuesday, August 08, 2006
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BEWARE OF UNILATERALLY CHANGING AN AGREED RETIREMENT AGE.

By Lusanda Raphulu
 
Where the employment relationship is brought to an end due to a retirement age dispute, the usual route followed by the employee is to allege an automatically unfair dismissal under the Labour Relations Act (“the LRA”) on the basis that the employer unfairly discriminated against the employee on the ground of age. Where the retirement age is contractually stated, the employee may also bring a claim for breach of contract arising from the unilateral change to their terms and conditions of employment.
 
In a noteworthy departure from the norm, the employee in the recent Labour Court decision of HOSPERSA obo Venter v SA Nursing Council opted to seek her remedy under the Employment Equity Act (“the EEA”).
 
Ms Venter had been employed by the South African Nursing Council. When she commenced work with the Council, her retirement age was specified as being the age of 70 years, with the election to retire at the age of 65 years. In 1995, all existing Nursing Councils were dissolved and an interim Council was formed. The employees of the existing Nursing Councils, including Venter, were deemed to be employees of the interim Council. The interim Council subsequently unilaterally amended the retirement age for all employees to 60 years, with the possibility of extension to the age of 65.

 
Venter was advised in the year in which she was to turn 60 that she was due to retire and that if she wanted an extension of her retirement age she should apply for one. She applied for an extension of her retirement age to 65. Her retirement age was only extended by one year. The following year she again applied for an extension and pointed out that at the time of her appointment, her conditions of service allowed her to work until the age of 65, and even 70 if she so wished. Her request for an extension of her retirement age was rejected.
 
She then referred a dispute in terms of the EEA alleging unfair discrimination on the ground of age. The court held that although the dispute was brought in terms of the EEA, the principles encapsulated in relation to discriminatory dismissals in the LRA provide guidance in handling allegations of discrimination based on age, in the employment context. More particularly the court referred to section 187 (2)(b) of the LRA which states that a dismissal based on age is fair if the employee has reached the normal or agreed retirement age.
 
The court further held that the principle decided in case law under the LRA that if there is an agreed retirement age between an employer and an employee, that is the retirement age that governs the employee’s employment, was equally applicable under the EEA. This is so even when there is a different normal retirement age for employees employed in the capacity in which the employee concerned is employed. The provision relating to the normal retirement age only applied where there was no agreed retirement age.
 
Thus, even though a new normal retirement age of 60 may have been established by the Council, the agreed retirement age applicable to Venter remained 70, with the option open to her to retire at the age of 65.
 
Accordingly, the court held that it was satisfied that the Council had unfairly discriminated against Venter on the ground of age in its policy of imposing a retirement age of 60, as contemplated in the EEA, and granted Venter compensation equal to 2 years’ remuneration.
Employers should therefore be aware that agreed retirement ages cannot be unilaterally changed and to do so is likely to be discriminatory.