Retirement Age

I have been asked the following question this morning:

"Can I be assisted on this matter, company policy states that the retirement age is 60 years with no extensions. Some years back employees were transferred to us (section 197 LRA) of which they still use their own pension fund which 65 years is the retirement age. The majority of employees are over 60 years of age and no longer productive. Any suggestions on how to retire them?"

Section 197(2)(a) of the LRA reads as follows: "If a business, trade or undertaking is transferred in the circumstances referred to in subsection (1)(a), unless otherwise agreed, all the rights and obligations between the old employer and each employee at the time of the transfer continue in force as if they were rights and obligations between the new employer and each employee and, anything done before the transfer by or in relation to the old employer will be considered to have been done by or in relation to the new employer."

The employer in question is facing the following problem.

Under the old regime (employer) the employees were used to the retirement age being 65. Should the new employer now decide to reduce the retirement age to 60 years of age, such variation of the employment contract will be regarded as a unilateral amendment of the employment contract.

The LRA allows employers to forcibly retire employees who have reached the "normal" retirement age, but fails to explain what constitutes normal retirement age.

Therefore, employers and employees need to look to case law for more detailed guidance and what would be fair in specific circumstances.

The employer's own rules and terms and conditions of employment can, within limits, play a significant role.

For example, in Rubin Sportswear v Sactwu and others, the employer took over a business and then introduced a rule changing the age at which employees were to take retirement.

The Labour Appeal Court found that the word "normal" means "the way things are normally done" and that the employer could not unilaterally change what was normal.

It is therefore imperative that employers have their rules reviewed in line with the latest interpretations of the courts.

In most circumstances, should any of these employees (60 years or older) then resign because they are not satisfied with such an amendment, the CCMA may find that the particular employees have been dismissed in terms of the provisions of Section 186. It will necessarily follow that such dismissal will be regarded as unfair, and the employer will end up re-instating these employees.

However, it is very difficult to say whether the new employer may find itself in the same detrimental position as described above. Firstly, it will depend on the terms and conditions of the existing employment contract. Then it will depend on the terms and conditions of the employment contract between the old employer and the relevant employees. An lastly, consideration will have to be given to the terms and conditions of the sales agreement between the old employer and the new employer.

Legal advice and assistance should be obtained to answer on the merits of each individual case..

It is advisable that the new employer commences a consultation process regarding early retirement and the official change of the retirement age. It allows the employer and the relevant employees to engage in a consultation process, which should in the end, be to the advantage of the employer. And yes, allow representatives of the relevant pension funds to address the relevant employees on the benefits of early retirement, if any. I will not even venture an opinion on this particular aspect, as I am not qualified and do not have the necessary knowledge on this topic.

Once the employees have accepted that they will benefit from early retirement, and they agree to accept early retirement, then the new employer may proceed to retire them.

Categorisation of a dispute

It happens that an employer receives a referral of a dispute, and that the referral does not disclose a cause of action (reason). Or that the cause of action (reasons) on the request for arbitration differs from those on the referral of the dispute.

The following case should be taken note of.

The applicant in Strautmann v Silver Meadows Trading 99 (Pty) Ltd t/a Mugg and Bean Suncoast and Others [2009] 10 BLLR 1007 (LC) was employed by Kishara CC t/a Mugg & Bean Suncoast as a general manager. After a disagreement with the members of the close corporation that employed him (of which he was also a member) the business of the close corporation was sold as a going concern to the first respondent. The first respondent contended that it was a condition of the sale that Strautmann would withdraw from the business and that he would not be involved in the business going forward.

Strautmann, on the other hand, contended that he was dismissed and that he was not aware of the reason for his dismissal. He contended, however, that his dismissal was not related to the transfer of the business. He referred a dispute to the CCMA. The conciliating commissioner, a Mr Vedan, issued a certificate recording that the dispute had remained unresolved. He ticked the box indicating that the nature of the dispute concerned an ‘unfair dismissal’ and added, in handwriting, ‘section 197 transfer of company as going concern’ and ‘automatically unfair dismissal in terms of s 187(1)(g) of LRA’. Vedan further indicated that the dispute should be referred to the Labour Court.

Strautmann was of the view that his dismissal did not relate to the transfer and was not automatically unfair – he contended that he was dismissed for an unknown reason. He accordingly referred the dispute to arbitration. At arbitration, the respondents raised a number of points in limine, including that the dispute ought to have been referred to the Labour Court as per the certificate. The arbitrating commissioner thereupon issued a ruling in which she held that Commissioner Vedan had previously ruled that the CCMA did not have jurisdiction to determine the matter, that the CCMA was functus officio and that the matter could not be arbitrated at the CCMA.

Strautmann took this ruling on review to the Labour Court. The court, per Van Niekerk J, held that the certificate of outcome had no legal significance other than to confirm that the dispute remained unresolved. The indication that was given as to which forum or courses of action might be open to the applicant was therefore nothing more than gratuitous advice. An applicant was accordingly not bound by the classification of a dispute on the certificate of outcome.

Furthermore, when the commissioner ticks a particular box on the certificate, he does not make up a ‘jurisdictional ruling’. To the extent that the arbitrating commissioner held that Vedan made a jurisdictional ruling when he completed the certificate of service, she committed a reviewable irregularity. The ruling was reviewed and set aside and the matter was referred back to the CCMA.

Interdicting disciplinary inquiries

In the past few months we have quite regularly heard on the news of people, holding high-raking positions, who have been suspended by their employers for the one or other reason. We have also noted the trend amongst these high-ranking officials to run to court to obtain some sort of relief against the employer.

The question we have to ask ourselves is if the Labour Court has any jurisdiction to prevent a disciplinary enquiry.

In Jiba v Minister of Justice and Constitutional Development and Others [2009] 10 BLLR 989 (LC), Ms Jiba brought an urgent application for a declarator that the decision to commence and proceed with disciplinary proceedings against her was unlawful, that the decision to suspend her was unlawful, and an order to be reinstated with immediate effect.

Jiba, a senior deputy director of public prosecutions in the National Prosecuting Authority’s (NPA’s) Directorate of Special Operations, was requested to assist the South African Police Service (SAPS) in an investigation concerning senior members of the NPA in September 2007. Following this engagement, she was requested by the NPA to divulge the contents of her communications with the SAPS. She refused to do so. Jiba was handed a letter of suspension on 12 December 2007. In February 2008, she was notified to attend a disciplinary inquiry to answer allegations of misconduct related to dishonesty, unprofessional conduct and bringing the NPA into disrepute. The hearing was postponed to 18 April 2008. At the commencement of the hearing, Jiba raised the point in limine that the NPA was precluded from proceeding with the inquiry because it had failed to proceed with the inquiry within 60 days as required by the applicable procedures. Having considered the evidence, the chairperson of the inquiry held that Jiba’s suspension came into effect on 10 January 2008 and that the inquiry was timeously convened. The inquiry was postponed to August 2008. At the commencement of the inquiry, Jiba applied for the indefinite postponement of the inquiry pending a review of the chairperson’s finding in relation to the point in limine. On 8 January 2009, Jiba received notice that the inquiry would proceed in February 2009. Although the tapes of the first hearing were made available to Jiba in August 2008, she received the transcript only on 27 January 2009. She accordingly filed this application on 29 January 2009 and contended that she was entitled to bring it as a matter of urgency.

The Labour Court, per Van Niekerk J, considered whether the court had jurisdiction to entertain the application. The fourth to 17th respondents argued that the court had no jurisdiction to intervene in internal disciplinary inquiries. As regards the suspension, they contended that Jiba had not referred a dispute concerning her suspension to arbitration and the time limits to do so had lapsed.

Van Niekerk J considered the decision of the Labour Court in Booysen v SAPS and Another [2008] 10 BLLR 928 (LC) where it was held that the Labour Court has no jurisdiction to intervene in disciplinary inquiries. In that case it was held that s 191 of the Labour Relations Act 66 of 1995 (LRA) requires disputes about the fairness of a dismissal to be referred to the Commission for Conciliation Mediation and Arbitration (CCMA) or a bargaining council with jurisdiction, and that those bodies – and not the Labour Court – have the jurisdiction to arbitrate disputes about dismissals for misconduct.

Van Niekerk J held that he was not convinced that the proposition in Booysen could be so broadly and unequivocally stated. It is so that the letter and purpose of the LRA precludes the Labour Court from making orders that would finally determine misconduct-disputes. However, s 158(1)(a) gives the court the power to grant urgent interim relief in respect of disputes that must ultimately be determined by arbitration. Whether the court should intervene is a separate question – but provided that the relief sought does not amount to usurping the CCMA’s statutory functions, the Labour Court, in principle, has jurisdiction to make interim orders concerning disciplinary proceedings. Nevertheless, he stated that it is undesirable for the Labour Court to entertain applications to review and set aside rulings made in uncompleted proceedings. This is because such intervention would undermine the informal nature of the system of dispute resolution established by the LRA, would frustrate the expeditious resolution of disputes and would entirely undermine the statutory dispute resolution system. By asking the Labour Court to rule that the disciplinary action initiated against Jiba was ‘unauthorised and unprocedural’, she was effectively asking the court to bypass the relevant bargaining council.

Regarding the suspension, the court held that it had jurisdiction to consider the matter but held that on the facts Jiba had not made out a case. As regards the application to review the chairperson’s ruling that the disciplinary inquiry was held within 60 days of Jiba’s suspension, the court observed that it has been held (in Lekabe v Minister of Justice and Constitutional Development [2009] JOL 23134 (LC)) with reference to the same policy that an employer’s right to discipline an employee did not fall away if the employer had failed to convene the inquiry within the 60-day period.

In the circumstances the application was dismissed with costs.