Prematurely terminating employment: Retirement age?

Note: Footnotes omitted, emphasis added and certain personal details redacted to comply with law.

[1] The arbitration of this matter took place at CCMA offices in East London on 24 April 2023.

[2] The applicant Ruth RE was present and represented by Abulele Sifumba. The respondent was present and represented by Kristen Hare.

[3] The matter was referred to conciliation on 4 February 2023.

[4] I am satisfied that the CCMA has the requisite jurisdiction as contemplated in section 138 of the Labour Relations Act 66 of 1995 (the “LRA”) to arbitrate the dispute.

[5] The applicant and respondent presented their closing arguments and I have taken them into consideration. The proceedings were both manually and electronically recorded.

Issue to be decided

[6] I am required to determine whether the dismissal of the applicant was fair or not. If not fair, to determine an appropriate remedy.
Background to the issue

[7] The incident that led to the dispute was when the applicant’s contract was terminated due to attainment of retirement age.

[8] The applicant would like to be reinstated.

[9] The respondent applied for the arbitration to be heard by a Senior Commissioner indicating that the matter was complex and the question of law but she never expatiated the complexity and nature of law [sic]. The applicant representatives did not oppose the application but stated that the dispute could be heard by any Commissioner.
[10] The application was denied as the respondent failed to justify or explain her application.

Survey of evidence

The respondent’s evidence

[11] The respondent witness Mzikazi Nduna stated that she is the Dean of the Department of Health Science. She indicated that Miss RE was a Clinical Facilitator at the University of Fort Hare. She indicated that the applicant’s first appointment was in 2015 on a rolling contract. The contract has been rolling automatically until the last contract from 1 April 2021 to March 2024.

[12] She stated that the applicant’s contract was not terminated but the employee reached her retirement age. She stated that there’s a policy which deals with retirement.

[13] She quoted from the respondent conditions of employment which indicated that the retirement age for all employees was 65 years. She stated that the applicant was aware of the policy and all policies were accessible to all employees.

[14] She also indicated that there was an employee who reached her retirement age but her contract was extended. She indicated that the applicant reached her 65 years in 2021.

[15] When she took over the Department, she asked for the files of all the employees and then enquired as to their status as she found that two should have retired including the applicant.

[16] The applicant was asked when her retirement was and she responded that her contract would be terminated on 31 March 2024 and consequently her retirement would be on the same date.

[17] HR issued the letter to the applicant on 23 August 2022 informing her of retirement on 31 December 2022.

[18] She confirmed that the respondent was aware or ought to have been aware of the applicant’s retirement age as the contract had the applicant’s identity number. Furthermore, the acceptance form had the identity number of the applicant.

[19] She indicated that she knew only one person who worked beyond the age of 65 and she was a professor. There was a submission made to the Vice Chancellor and it was approved but in this matter there was no submission made to the Vice Chancellor.

The applicant’s evidence

[20] The applicant stated that she worked for the respondent for a period of 7 years and three months. She has been working under three-year contracts that were renewed until her last contract of 1 April 2021 to 31 March 2024.

[21] She indicated that she disclosed her age to the respondent and it was on her Curriculum Vitae. She stated that she was not aware that there was a retirement policy.

[22] She stated that she was offered the new contract on 17 February 2021 and she was left with 3 months before reaching her retirement age of 65 years.

[23] The applicant raised her concern when she was not included on the schedule on 1 December 2022 and then she enquired about her exclusion.

[24] She averred that she knew one other employee Viola Van Vuuren was 68 years old when her contract came to an end in September 2022. She added that there were other clinical facilitators who worked beyond their retirement age.

[25] She indicated that she was familiar with University of Fort Hare policies but could not find any retirement policy.

[26] The respondent never engaged her regarding the termination of contract but simply sent her a letter that she should be retiring on 31 December 2022.

Analysis of evidence and argument

[27] Section 186(1)(a) defines dismissal as when an employer has terminated employment with or without notice.

[28] It is common cause that the applicant signed a contract that commenced on 1 April 2021 to 31 March 2024.

[29] It is also common cause that there were other employees who worked beyond their retirement age and they were placed on fixed-term contract as per the policy.

[30] The conditions of employment policy clearly stated that the retirement age was 65 years and would only be extended on a fixed-term contract which must be approved by the Vice Chancellor.

[31] In Buthelezi v Municipal Demarcation Board1 the Labour Appeal Court held that when parties enter into a fixed-term contract they bound themselves for a specific period and no party can escape its obligation under the terms of the contract unless there is a material breach. If an employer has taken the risk by offering a fixed-term contract rather than a contract for an indefinite period, he cannot later complain. The Court held further that when compensation is calculated consideration should be given to the loss of income the employee will suffer as a result of the early termination.

[32] The applicant signed a fixed-term contract three months before her expected retirement and was allowed to work beyond her retirement for more than a year.

[33] The respondent representative referred to Boss v Eon Consulting (Pty) Ltd2 where the court [LC per Sean Snyman AJ] held that, because a dismissal on the basis of an agreed retirement age or a normal retirement age is deemed to be fair by virtue of the application of section 187(2)(b), there is no separate requirement of procedural fairness in effecting it. Therefore, there is no need to first consult the employee or afford the employee some kind of hearing before implementing retirement.

[34] However the difference with this case is that there was no contract of employment between the parties but in this dispute there was a fixed-term contract binding the parties to a specific period.

[35] The respondent has entered into a fixed-term contract with the applicant and therefore she has an obligation to honour the contract.

[36] There was no submission made by the respondent that the contract was entered into in error, therefore there was a meeting of minds by both parties.

[37] I find that the dismissal is procedurally and substantively unfair.

[38] The applicant has been out of work for a period of 4 months and therefore she should be back paid from December 2022 to April 2023 at R40 731,25 per month.( R40 731,25 x 4 = R162 925)

Award

[39] The respondent is ordered to reinstate the applicant effective from 31 December 2022.

[40] The respondent is ordered to back pay the applicant a total amount of R162 925 which should be deposited into her bank account by not later than 19 May 2023.

[41] The applicant is ordered to report for duty at the respondent premises on 15 May 2023 at 8am.

Flynote:

“Dismissal – Retirement – Employer concluding fixed-term contract with employee who had passed retirement age and prematurely terminating contract – Dismissal unfair.
Fixed-term contracts – Breach of – Employer prematurely terminating fixed-term contract on ground that employee had passed retirement age – Terminating amounting to unlawful and unfair breach.”

Summary: