Section 187(1)(f), read together with Section 187(2)(b) of the Labour Relations Act 66 of 1995 (LRA), provides that a dismissal based on age discrimination is automatically unfair unless the employee has already reached their normal or agreed retirement age.
The interpretation of these sections as it relates to the individual who was allowed to continue working following their reaching of the relevant age.
One of the leading cases on this issue was handed down 26 years ago in Schweitzer v Waco Distributors (A Division of Voltex (Pty) Ltd) [1998] JOL 3064 (LC) (Waco), a judgement delivered by Zondo prior to his tenure as Chief Justice. The court in Waco held that, regardless of whether an employer terminates employment a day or a year after the employee reaches retirement age, the dismissal remains lawful. Moreover, no fair procedure is required in effecting such a termination.
The issue recently came before the Constitutional Court in Motor Industry Staff Association and Another v Great South Autobody CC t/a Great South Panelbeaters and a related matter 2025 (3) BCLR 312 (CC). The Constitutional Court heard two cases with similar facts to Waco but was divided, with no majority judgment prevailing. Consequently, Waco remains binding law.
The matters in question involved employees who were dismissed based on age, with termination occurring well after they had reached their respective normal or agreed retirement ages. In Motor Industry Staff Association and Another v Great South Autobody CC t/a Great South Panelbeaters (JA68/2021) [2022] ZALAC 103; (2022) 43 ILJ 2326 (LAC) (Landman), the employee’s contract specified a retirement age of 60, yet he was dismissed 10 months after reaching that age. In Solidarity obo Strydom & 5 Others v State Information Technology Agency SOC Ltd (C 148/18; JS 49/18; JS 67/18; JS 68/18; JS 338/18; JS 195/18) [2022] ZALCJHB 95; (2022) 43 ILJ 1881 (LC); [2022] 9 BLLR 843 (LC) (Solidarity), the company policy set the retirement age at 60 or 65, depending on objective circumstances. It further provided that, with the employer’s consent, an employee could continue working until age 67. In Solidarity, six employees were dismissed after surpassing their respective retirement ages.
Former Chief Justice Zondo’s judgment
Despite having ruled in Waco, former Chief Justice Zondo reconsidered his stance, arguing that fairness requires an evolution of the law. He disagreed that it would be fair to permit dismissal based on age at any time after an employee reaches their normal or agreed retirement age. Instead, he held that such dismissal would only be fair if effected on the exact date the employee reaches the relevant age or, where agreed, on the last day of that month. He stated that a dismissal occurring outside this timeframe would not be protected under section 187(2)(b) and would instead constitute an automatically unfair dismissal under section 187(1)(f).
Former Chief Justice Zondo’s view was based on the concern that granting an employer an indefinite right to terminate employment at any time after the employee reaches retirement age creates a risk of abuse. Specifically, an employer could disguise an unfair dismissal as one based on age. He identified three potential ways this could happen:
- Where employees participate in a lawful strike, to the employer’s disapproval.
- Where employees are suspected of misconduct, but the employer dismisses them to avoid undergoing a formal disciplinary process.
- Where the employer initiates retrenchments, but seeks to evade severance pay obligations by disguising the dismissals as retirement related.
Former Chief Justice Zondo held that this unfairness is exacerbated by the difficulty, if not impossibility, of proving the employer’s true motive in such cases. Zondo further noted that the imbalance of bargaining power between employers and employees entrenches this unfairness. While an employer may maintain an employee’s services for as long as needed, the employee remains vulnerable to sudden termination with little notice, making it difficult to plan their financial affairs.
Judge A Van Zyl’s judgment
Judge A Van Zyl was of the view that an employer may, by virtue of ordinary contractual principles, elect to terminate employment once the employee reaches their normal or agreed retirement age. However, this election must be exercised within a reasonable time for the dismissal to be considered fair. The election may be express or tacit, meaning that a failure to terminate the agreement within a reasonable time may constitute tacit consent to its continuation. Whether such consent exists depends on the employer’s intention, which should be assessed by considering what a reasonable person in the employee’s position would perceive the employer’s intention to be. Furthermore, the employer can only be regarded as having intended to terminate the agreement if they had knowledge of the relevant legal and factual considerations informing their decision. Specifically, the employer must have known that: it was necessary to exercise the right to terminate the agreement at the retirement age; the employee had already reached the retirement age; and failing to exercise the election could amount to a waiver of that right.
Regarding fairness, Judge A Van Zyl took an entirely different stance. He held that the rights of both the employee and employer must be balanced, and that the employer’s right to terminate employment upon or after the normal or agreed retirement age is essential. Judge A Van Zyl disagreed with former Chief Justice Zondo’s concern over employee vulnerability, asserting that employees are not inherently at risk of abuse in such cases, as the true reason for dismissal can always be assessed as a factual enquiry.
Judge Rogers’s judgment
Judge Rogers presents a distinct perspective, holding that an employer may terminate an employee’s contract at any time after they have reached their normal or agreed retirement age. However, this right is subject to the employee being given reasonable notice before termination.
Judge Rogers argues that this approach is fair, as the structure of the economy allows older employees to financially prepare for retirement, while also ensuring that younger job seekers have opportunities to enter the workforce. Additionally, he argues that allowing employers to dismiss employees at any point after the retirement age preserves employee dignity, as it prevents them from facing the humiliation of an incapacity hearing should age-related decline affect their performance. Finally, Judge Rogers asserts that this flexibility removes pressure from employers to dismiss employees immediately upon reaching retirement age, out of concern that they might lose the ability to terminate them at a later stage.
As there was no majority ruling in the recent decision, the Waco position remains binding until a similar case comes before the court and is decided. This means that employers may still dismiss an employee based on age at any time after the employee has reached their normal or agreed retirement age, without the need to follow a fair procedure. However, the future development of the law in this area remains uncertain. As a cautious approach, employers may consider effecting dismissal on, shortly after, or within a reasonable period following the employee reaching their retirement age.
