Dismissal on the grounds of age is generally considered automatically unfair discrimination in terms of the Employment Equity Act (EEA) and the Labour Relations Act (LRA).  However, legislation makes a clear exception when it comes to retirement.  Employers are permitted to fairly dismiss an employee who has reached the normal or agreed retirement age.

Section 187(2)(b) of the LRA, creates an exception i.e. a dismissal is fair if fair if the employee has reached the normal or agreed retirement age for employees in that capacity.  The EEA also prohibits unfair discrimination based on age, but allows for retirement policies aligned with normal and agreed retirement ages.

What is the “Normal or Agreed” Retirement Age?

• Agreed retirement age:

An age specified in the employment contract, collective agreement or company retirement policy accepted by the employee. 

• Normal retirement age:

The generally accepted retirement age within the employer’s business, sector, or industry (often 60 or 65 years in South Africa).

Courts have ruled that even in the absence of a written clause, the established practice in the workplace may constitute a “normal” retirement age. 

Practical Considerations for Employers

• Ensure employment contracts specify a clear retirement age.
• Apply retirement policies consistently across the organisation to avoid claims of discrimination.
• Where employees continue working past retirement age, a new agreement should be recorded in writing to avoid ambiguity.

Employers should take care to have clearly defined retirement policies and contracts to prevent disputes, while employees should be aware of their rights once they reach the retirement threshold.