Introduction
The question of whether an employer may lawfully dismiss an employee who continues to work after reaching retirement age has long been a contentious issue in South African labour law. Although section 187(1)(f) of the Labour Relations Act 66 of 1995 (“LRA”) renders dismissal on the basis of age automatically unfair, section 187(2)(b) provides a crucial exception: such dismissal is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.
This exception, however, has been subject to varying judicial interpretations. The Solidarity obo Strydom and Others v State Information Technology Agency SOC Limited (“SITA”) judgment of the Labour Court has reaffirmed an employer’s right to rely on section 187(2)(b) even after an employee has worked beyond their normal retirement age. This article examines this position, its interplay with recent Constitutional Court decisions, and its broader implications for employers and employees.
The Legal Framework: Section 187 of the Labour Relations Act
Section 187(1)(f) of the LRA states that dismissal on the basis of age constitutes an automatically unfair dismissal, except where section 187(2)(b) applies. The latter section provides that dismissal is fair if the employee has reached the normal or agreed retirement age for employees in that capacity.
This legislative balance seeks to protect employees from arbitrary age-based dismissals while allowing employers to manage succession planning and create employment opportunities for younger workers, a consideration of particular relevance in South Africa’s context of persistent youth unemployment.
The Labour Court in SITA: Affirming Employer’s Right
In Solidarity obo Strydom and Others v State Information Technology Agency SOC Limited, the Labour Court clarified that an employer may rely on the protection in section 187(2)(b) from the date the employee reaches the normal retirement age and at any time thereafter.
The Court held that where an employee continues to work uninterrupted beyond the normal retirement age, the employment contract and relationship continue on the same terms, and the retirement age remains unchanged. Consequently, the employer may lawfully dismiss the employee at any later stage based solely on age, without such dismissal being automatically unfair, provided that the decision is bona fide and compliant with the statutory framework.
This principle, however, is not absolute. The Court emphasized two key qualifications:
A new retirement age may arise if expressly agreed between the parties; and
The employer may be deemed to have waived its right to rely on the original retirement age through unequivocal conduct suggesting an intention to abandon that right.
The Labour Court further justified its interpretation as aligning with the social purpose of section 187(2)(b): enabling employers to make space for younger employees and contributing to labour market renewal in a country facing high unemployment levels.
The Constitutional Court’s Split in Landman and Solidarity
The Labour Court’s reasoning must be understood against the backdrop of the Constitutional Court’s split decision in Motor Industry Staff Association and Another v Great South Autobody CC t/a Great South Panelbeaters and Solidarity obo Strydom and Others v SITA.
In a divided 4–4–1 judgment, the Constitutional Court failed to deliver a definitive position:
Four judges (including the Chief Justice) held that dismissal on the basis of age is fair only if it occurs at the point the employee attains the agreed or normal retirement age, or, at most, at the end of that month. Any dismissal thereafter would be automatically unfair.
Another four judges endorsed the opposite view, maintaining that employers may dismiss at any time after the retirement age, provided reasonable notice is given and the employer has not waived its right to do so.
The ninth judge adopted a contractual approach, reasoning that upon reaching retirement age, the employer must elect either to terminate the contract (fairly) or to continue it, in which case subsequent termination must comply with ordinary fairness standards.
The absence of a majority left the law unsettled and created uncertainty for employers seeking to manage post-retirement employment relationships.
The Labour Appeal Court’s Interpretation Prevails
In the aftermath of the Constitutional Court’s divided ruling, the Labour Court and Labour Appeal Court have reaffirmed the earlier, more pragmatic approach first articulated in Waco Distributors (Pty) Ltd v Olivier and later confirmed in Landman v Great South Autobody CC t/a Great South Panelbeaters.
The prevailing position ,as restated in the SITA judgment, is that employers are entitled to rely on section 187(2)(b) to dismiss an employee at any stage after they have reached the normal or agreed retirement age, unless a new agreement or waiver can be shown. This interpretation offers both doctrinal coherence and practical certainty, enabling employers to manage workforce transitions without fear of triggering an automatically unfair dismissal.
Practical Implications and Policy Considerations
The reaffirmed position offers several practical takeaways:
For employers: It remains critical to specify a clear retirement age in all employment contracts and to maintain documentation of any subsequent agreements or extensions. Employers should also provide reasonable advance notice of retirement-based terminations to ensure fairness and dignity in the process.
For employees: Those who continue working beyond retirement age must recognize that they do so effectively on “borrowed time”. Their employment remains lawful but terminable on the employer’s election, subject to section 187(2)(b).
From a policy perspective: This interpretation aligns with the LRA’s underlying objectives by balancing fairness to older employees with the broader social imperative of creating employment opportunities for younger workers. It also ensures consistency and predictability in an area of law historically prone to uncertainty
Conclusion
The Labour Court’s decision in SITA has brought much-needed clarity following the Constitutional Court’s fractured judgments in Landman and Solidarity. The legal position, as it currently stands, is that once an employee reaches the normal or agreed retirement age, the employer may lawfully terminate employment based on age at any subsequent time by relying on section 187(2)(b) of the LRA.
This will remain the case unless there is compelling evidence of a new retirement agreement or an unequivocal waiver by the employer. While the trend of post-retirement employment is likely to continue amid changing economic realities, employees who work beyond retirement must be cognizant that their employment continues at the discretion of the employer, effectively, on borrowed time.
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Ross Hendriks | Employment Law
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