Automatically unfair dismissal based on age
CASE:
Seokwane v Bidvest Prestige Cleaning Services (Pty) Ltd (Case No. JS 1040/20, Labour Court Johannesburg) (8 November 2023)
BACKGROUND FACTS:
Section 187(2)(b) of the LRA provides that a dismissal based on age is fair if the employee has reached the normal or agreed upon retirement age for persons employed in that capacity. This case deals with the application of that section.
The applicant was a general worker, employed in 2002 by Tsebo (Pty) Ltd which had a cleaning contract with the Volkswagen Group. In June 2019 Tsebo lost the contract to Bidvest Prestige, which employed the applicant at the request of Volkswagen. The employment was in the form of a fixed-term contract for three years effective from 1 July 2019. At that time the applicant was 62 years of age. The contract; a standard document, specified that the retirement age was 60.
In May 2020, during the Nationwide Lockdown due to the Covid-19 Pandemic, the applicant claimed she was offered a retrenchment package. She asked for reasons and was told she was to be retrenched because she had exceeded the retirement age. When the employee resumed duty in June 2020, she again requested reasons for her planned retrenchment and was informed that the company expected a drop in the number of employees on the Volkswagen contract. She had expected to be employed until October 2022 when the respondent’s contract with Volkswagen would have expired. Nevertheless, her services were terminated on 30 June 2020.
The respondent denied that it had retrenched the applicant, and as such it was common cause that the applicant was not retrenched, but had been retired by the respondent. The respondent claimed that it had not wanted to employ the applicant because of her age, but was persuaded to do so by Volkswagen. Volkswagen reduced the number of employees working on the contract with effect from 1 July 2020, by only one employee.
The applicant instituted proceedings in the Labour Court claiming an automatically unfair dismissal on the grounds of age, in terms of section 187(1)(f) of the LRA. In those proceedings the respondent relied on the terms of the contract and the case of Motor Industry Staff Association v Landman and another (2022) 43 ILJ 2326 (LAC). The clause in the contract read: ‘The employee will retire at the end of the month in which he or she reached the age of 60.’ The respondent also relied on its retirement policy which provided for a normal retirement age of 60.
The Court held that since the applicant was already past the age of 60 when she entered into the contract, the provisions of the contract and the retirement policy could not assist the respondent as they presupposed that the contract was entered into before the employee reached the retirement age. With regard to the Motor Industry Staff Association case, the Court noted that the LAC had, in that case, specifically stated that it was impermissible for an employer to rely on section 187(2)(b) of the LRA in terminating a contract of employment where the real reason for the dismissal was based on operational requirements or misconduct or incapacity.
The Court noted that the respondent had disregarded its retirement policy in order to please its client and in doing so had an obligation to inform the applicant of the peculiarities of her situation, which it had not done. The respondent’s witness (a senior executive) had testified that the respondent had elected to retire the applicant in order to avoid a retrenchment when the number of staff working on the Volkswagen contract was reduced by one. The Court found that the real reason for the applicant’s termination was the respondent’s operational requirements. The dismissal of the applicant was automatically unfair because she was selected for termination on the grounds of her age. This constituted unfair discrimination. The applicant was awarded compensation equivalent to 12 months’ remuneration.
KEY TAKEAWAY
The Court noted that a fair retirement process envisaged that an employee and employer would be aware of the retirement date, and this knowledge gave employees sufficient time to prepare for their retirement. This opportunity was denied to the applicant, who was given a month’s notice of her retirement. The Respondent had no regard for the impact of its conduct on the applicant, a vulnerable employee.
This judgement serves as a caution to employers that the ramifications of a post-retirement age contract should be fully explained to the employee concerned. When it comes to vulnerable employees in particular, employers need to be sensitive to the question of social justice and its moral as well as legal obligations.
