Employment law update – Changes to retirement age

February 1st, 2019

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowmans in Johannesburg.

In BMW (South Africa) (Pty) Limited v National Union of Metalworkers of South Africa and Another [2018] JOL 40518 (LAC), an employee approached the Labour Court (LC) alleging that her dismissal was automatically unfair as the employer insisted that she retire on reaching the age of 60. The LC held that this was an automatically unfair dismissal in terms of s 187(1)(f) of the Labour Relations Act 66 of 1995.

The employer then appealed the LC’s decision. The employee cross-appealed as she had claimed damages for loss of earnings that she would have earned had she worked until the age of 65 and this claim had been dismissed by the LC. The employer alleged that the employee had agreed to retire and, as such, her employment terminated automatically by the effluxion of time. The employer alleged in the alternative that in the event that the employee had not agreed, she had retired at the normal retirement age and thus this did not constitute a dismissal. The employee argued that she did not consent to a retirement age and that she had in fact elected in writing to preserve her vested right to retire at the age of 65.

The Labour Appeal Court (LAC) accordingly had to consider whether there was an agreed or normal retirement age of 60. The employee’s letter of appointment was silent on retirement age. It did, however, incorporate a staff handbook by reference. At the time of the employee’s appointment, this handbook referred to a retirement age of 65 but expressly provided that it could be varied unilaterally by the employer. The employer acknowledged that it did not have the power to unilaterally amend the employment contract. In about 1994, the employer changed its policy and the BMW pension fund rules to reflect a retirement age of 60. It was communicated to the employees that the retirement age had changed to 60. It also stated that those employees who wanted to retain a retirement age of 65 would be able to do so but would need to communicate this in writing by 31 May 1995, failing which the change in retirement age would be implemented.

The employer later realised that some employees had not exercised their rights in this regard as certain employees were of the view that the change did not impact them as they were members of a provident fund and not a pension fund. Thus, the employer sent another communication to the employees in 1997 referring them to the 1995 communication and stating that they had until 24 March 1997 to make their election should they wish to do so. The employee stated that she was aware of this communication and completed the form to preserve her right to a retirement age of 65. She alleges that she sent this form to the relevant person but did not retain a copy of the form. She also said that she followed up on the status of her election form but could not remember the name of the person she spoke to in this regard. She had no evidence that the election form was received by the employer.

In 2010 the employee noticed that her benefit statement recorded her retirement age as 60. She said that she went back through her benefit statements and the change to 60 appeared from 2000 onwards. She communicated with the relevant personnel. On investigation, she was informed that the employer had no record of an election form being submitted by her and thus the change in her retirement age was implemented. She was invited to provide proof that she submitted an election form. She did not respond to this but re-opened the matter about three years later as her 60th birthday was approaching. She stated that she did not accept the change to her retirement age and the onus was on the employer to prove that she had. She lodged a grievance stating that she was pressurised to retire. During this process she never alleged that she had submitted the election form preserving her rights. Instead, she said that the employer must prove that she had signed to accept the change. The first time that she raised the issue that she had submitted the election form was after she retired and instituted this claim. Thus, the LAC found that there were material inconsistencies in her version. Her demand that the employer provide proof that she accepted the retirement age of 60 is inconsistent with her later allegation that she had made an election for her retirement age to remain 65.

The LAC held that the probabilities were against the employee’s version and the LC had misdirected itself by not engaging on these issues. It was found that given the delay between 1997 and 2010 and then the further delay from 2010 until 2014, it was improbable that the employee had completed the election form and preserved her right to retire at 65. Her employment accordingly terminated on the agreed or normal retirement age and she was not automatically unfairly dismissed. The appeal was upheld.

Dismissal for failing to obey an instruction to attend a performance meeting

In TMT Services and Supplies (Pty) Limited v Commission for Conciliation, Mediation and Arbitration and Others [2018] JOL 40517 (LAC), the employee was dismissed for gross insubordination after failing to attend a meeting to discuss an audit report on her performance. When the employee’s manager had phoned her the day before to schedule the meeting the employee advised that she felt uncomfortable about the meeting as she did not want the person who had conducted the audit on her performance to attend the meeting. Her manager stated that this individual needed to be in attendance as she was the author of the report on her performance. The employee sent an e-mail to her manager that night confirming that she was not comfortable in attending the meeting and asked to reschedule the meeting and be given an agenda. Her manager responded in the early hours of the morning stating that she needed to attend the meeting. She confirmed in an SMS that they would see each other at the meeting. She alleges that she did not receive these communications until much later as her phone battery was flat. When she did receive the communications, she responded to say that she was not nearby and asked if they could arrange the meeting for another day.

The employee was dismissed for gross insubordination for failing to obey an instruction. The employee had been engaged on a five-year fixed term contract and had three years remaining on the contract at the time. The employee referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) and the arbitrator found that the dismissal was fair. The matter was then taken on review to the Labour Court (LC). The LC found that the dismissal was unfair and ordered the employer to pay the employee the balance of the fixed term contract remaining from the date of dismissal.

On appeal, the Labour Appeal Court (LAC) had to determine whether the decision reached by the arbitrator was one that a reasonable decision maker could make. It was held that an arbitrator is afforded the power to exercise discretion and make a value judgment as to the severity of misconduct. Thus, the decision of the arbitrator must stand unless no reasonable arbitrator could have reached that decision. The LAC placed great emphasis on the fact that the employee made herself unavailable for the meeting before getting a response from the manager accepting her request for a postponement. It was found that she should have attended the meeting in the absence of being excused from it.

This said, the LAC considered whether progressive discipline should have been applied, particularly because the act of defiance was an isolated event and the defiance seemed to be triggered by apprehension instead of malice. It was held that the test to be applied is not whether a reasonable decision maker could have imposed a lesser sanction but rather whether no reasonable decision maker could have found dismissal appropriate. It is, therefore, a higher threshold. The arbitrator had found that the refusal to attend the meeting undermined the employment relationship and broke down the trust with her manager. Thus, the arbitrator was of the view that dismissal was appropriate. It was held that the arbitrator’s decision was not one that no reasonable decision maker could make particularly when regard is had to the fact that the employee tried to manipulate a postponement.

The LAC found that the LC conflated an appeal with a review and the appeal was accordingly upheld.

This article was first published in De Rebus in 2019 (JanFeb) DR 47.