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HR 101 – What to do When . . . You want to retire staff

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Please note that this pertains to South Africa Labour Relations & Best Practice requirements.

The Basic Conditions of Employment Act (BCEA) states clearly that each employment contract should stipulate the age of retirement.

The problem of course arises when employers have not given employees Letters of Employment, or worse – they have issued Letters of Employment, but the letter does not stipulate the retirement age.

This of course is where things usually go pear-shaped! You see the generally accepted age is 60 or 65 years and if nothing is stipulated in the Letter of Appointment you cannot suddenly retire someone at, say aged 55 or even worse, since the retirement age has not been stipulated, you cannot force them to retire at 60 or 65 either!

Once your Letters of Appointment have gone out to staff (with or without the relevant retirement age), you now cannot all of a sudden decide that you want to make the retirement age 57.

This now has to become a negotiation or at the very least, a consultation with your staff in order to reach a consensus.

Should you decide on your own, what age you wish for them to retire, this will be considered a ‘unilateral amendment of employment conditions’ and your employees then would have the right to either refuse the age or comply with forced retirement at the age that you have decided upon.

That said, as an employer, you do have the right to enforce a formal retirement age, at a certain stage, even if this has not been done consistently in the past, as long as you go the necessary consultation or negotiation course with your staff.

If, for example, the employer has not indicated the retirement age at say 60, then after a negotiation process the retirement age is fixed at 60, the employer now cannot go and ‘retire’ all of those employees who are already 60 and over. This would be seen as ‘unfair’ dismissal. What would need to occur is that the retirement age of 60 would need to be phased in over a period of say two years. This would give the affected employees time to sort their lives out and plan for their retirement.

Clearly, the first prize would be to have the retirement age clearly stipulated in the Letter of Employment. For those of you who have employees nearing the retirement age, who don’t have anything stated in their Letters of Employment, now is the time to start the consultation.