Assume an employer extends employment beyond the fixed age for retirement, subject to the condition that thereafter employment will be solely ‘at the will’ of the employer.   Does that mean the employee forfeits the statutory right not to be unfairly dismissed, provided employment is terminated lawfully ?

It is contended that an age proviso to an employee’s statutory right not to be dismissed for any reason that is automatically unfair, cannot possibly be interpreted to mean that employers no longer need to prove a fair dismissal when the reason for dismissal relates solely to age.

Francis J in the Labour Court in Randall v Karan t/a Karan Beef Feedlot  (2010) 31 ILJ 2449 (LC)  decided that the dismissal of the group financial director based solely on age, after being allowed to work after reaching the ‘normal’ retirement age, was automatically unfair and awarded him compensation in an amount based on 24 months, remuneration as at the date of dismissal.

The employer’s appeal to the Labour Appeal Court was allowed and the compensation order set aside.

In Karan t/a Karan Beef Feedlot v Randall case no JA 87/10 decided on 22 June 2012 the Labour Appeal Court (Tlaletsi JA, Davis JA & Murphy AJA) recorded that the employer had requested the group financial director in writing to continue working after the ‘normal’ retirement age of 60 years.   But the letter also stated that

“The normal notice period will apply in the event that we would like you to go on retirement.”

The LAC held that the director had

“. . . tacitly  agreed to work beyond the normal retirement age and left it to the (employer) to determine the retirement age or date on notice to the (director). There is nothing unlawful or unfair in the agreement reached by the parties under these circumstances.”

It seems that the LAC decided that section 187(2)(b) of the LRA not only protects employers but also allows them to extend the ‘protection’ by creating a situation where employment becomes ‘at will’ subject to lawful termination on reasonable notice.   The LAC accepted that the reason for dismissal was related solely to age but because of the so-called ‘protection’ the employer was then allowed to discriminate against the director solely related to his age.

Recently a blog was posted Interpretation of statutes and exceptions dealing with the correct method of interpreting statutes, more particularly exceptions or proviso clauses.

The judgment discussed was that of Wallis JA in Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] JOL 28621 (SCA) in which Farlam JA concurred.

“The Labour Relations Act, 1995 section 187 is headed  ‘automatically unfair dismissals” and reads (abbreviated):

(1)  A dismissal is automatically unfair . . . if the reason for the dismissal is … (f) that the employer unfairly discriminated against an employee, directly or indirectly, on any arbitrary ground, including, but not limited to . . . age;

(2)  Despite subsection (1)(f), a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.

If section 187(2) is in the nature of a proviso or an exception to the general prohibition against unfair discrimination, including age, how can it ever allow employers to base a dismissal only on age and then regard that dismissal as not automatically unfair but actually as fair, when all dismissals require a fair reason and a fair procedure ?”

It was suggested that

“The question is then whether that ‘proviso’ qualifies as ‘an independent enacting clause’.   If it cannot be regarded as independent then employees can enforce their right not to be unfairly dismissed and employers will have to prove that the dismissal was fair.”

Read that blog Interpretation of statutes and exceptions for much more insight into the problem.

Here are some further extracts from the LAC judgment:

[17]      It is common cause that the dismissal of the respondent was based on his age.   His dismissal would therefore be automatically unfair unless the appellant shows that there is a fair reason for it.   The appellant relies, for justification of the dismissal of the respondent, on section 187(1)(f), which provides that a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.

[18]      In casu, the court a quo found, correctly on the facts, that there was indeed an agreed retirement age of 60 years that was applicable to the respondent.   However, the court held further that the respondent having reached the retirement age, the appellant offered him new employment by medium of the letter dated 08 August 2003 without stating what his new retirement age would be and instead reserved to itself unilaterally decide when to retire the respondent from his new employment contract.   The court a quo ruled that the appellant was not legally empowered to determine unilaterally, the date or age of retirement of an employee.

[19]      There are two plausible arguments concerning the application of section 187(1)(f) and 187(2)(b) in this matter.   The first is that where there is a normal or agreed retirement age and the employee has reached that age, the employer shall enjoy protection prescribed in section 187(2)(b) from that date and at any time thereafter.   He or she would be entitled to terminate the employment of the employee on the grounds of age.

[20]      The second scenario is that, when there is an agreement reached between the employer and employee before the latter has reached the normal or agreed retirement age, to determine a new retirement age, the employer would enjoy the protection of section 187(2)(b), should he/she terminate the employment of the employee, once the new agreed employment date is reached.

[21]      In light of the facts of this case, it is not  necessary to decide upon the merits of the first argument.   What is common cause is that the respondent was informed in the letters dated 08 August 2002 and 25 February 2004 respectively that the appellant required him to continue working beyond his retirement date and that it was left to the appellant to determine on notice when the respondent is to be retired.   The Court a quo found, and it was also common cause in this Court, that the respondent did receive the aforementioned letters and did not respond to them.   He instead continued with his employment beyond the date on which he reached his retirement age.

[22]      The finding of the Court a quo that the appellant was not entitled to unilaterally determine a retirement date is therefore, in the circumstances of this case, not correct.   The respondent tacitly agreed to work beyond the normal retirement age and left it to the appellant to determine the retirement age or date on notice to the respondent.   There is nothing unlawful or unfair in the agreement reached by the parties under these circumstances.   It was open to the respondent to reject the condition imposed by the appellant at the time it was made and make a counter proposal.   He also had an election to refuse to continue rendering his services beyond his agreed retirement age.

[22] The finding of the Court a quo that the appellant was not entitled to unilaterally determine a retirement date is therefore, in the circumstances of this case, not correct. The respondent tacitly agreed to work beyond the normal retirement age and left it to the appellant to determine the retirement age or date on notice to the respondent. There is nothing unlawful or unfair in the agreement reached by the parties under these circumstances. It was open to the respondent to reject the condition imposed by the appellant at the time it was made and make a counter proposal. He also had an election to refuse to continue rendering his services beyond his agreed retirement age.