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Have you agreed on retirement age with your employees? If not, you could land in big trouble with the CCMA

by , 25 February 2013
Yesterday, Cuban president, Raul Castro said he'll step down as president in 2018 following a final five-year term, reports The Indian Express. The 81 year old also said he hopes to 'establish two-term limits and age caps for political offices including the presidency.' That's phenomenal considering that 65 is the age most companies expect employees retire at. But before you insist an elderly employee retire, make sure he's reached the 'agreed' retirement age. If you don't, it could cost you up to 24 months' remuneration!

When it comes to dismissing employees based on age, the Labour Relations Act (LRA) is very clear:

Unless an age-based dismissal is a result of your employee reaching the 'the normal or agreed retirement age for persons employed in that capacity', age-based dismissals are unfair.

But what exactly does normal retirement age mean?

'The word 'normal' isn't defined in the LRA, but the Labour Appeal Court has found that 'normal' means something which accords with a norm (or the way something is usually done),' explains the experts at The Labour Law for Managers Loose Leaf Service.
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Essentially, that means retirement age becomes 'normal' when employees in your company have been retiring at that age over a period of time long enough that it can be said to be the norm.

While that's all good and well, it's best you agree a normal retirement age with your employees to avoid being hit with a discrimination case at the CCMA.

How to get your employees to agree to your company's retirement age in writing

'The best place to record an agreed retirement age is in the employment contract or letter of appointment that you issue at the start of the employment relationship,' advises employment lawyer Stuart Harrison in The Labour Law for Managers Loose Leaf Service.. Getting your employee to sign this is the easiest way to prove they agreed to the retirement age if they try and contest your ruling later on.

If, on the other hand, your employment contract doesn't stipulate a retirement age, put together a retirement policy document that stipulates your company's retirement age.

And be warned says Harrison: 'Before assuming there's a normal retirement age for a particular employee, check your records to see how many employees in the same category have retired at that age and over what period of time. You can only safely assume there's a normal retirement age if there have been numerous retirements at the same age by employees in the same category and over a lengthy period of time.'

If you don't check this, you could land your company in big trouble with the CCMA if your employee sees your request for retirement as an age-based dismissal

For answers to all you questions on employment, contracts and labour laws click here.

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