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.

Smoking in the workplace

I do believe that most businesses (employers) have a smoking policy in place. Smoking in the workplace is governed by the Tobacco Products Control Act, Act 83 of 1993. The framework for such smoking policy is set out in government notice GNR975 of GG 21610 of 19 September 2000. 

In terms of item 6, an employer must ensure that no person smokes anywhere other than in the designated smoking area in that work place. Item 7 requires that an employer must ensure that employees who do not want to be exposed to tobacco smoke are protected from tobacco smoke in that workplace and employees may object to tobacco smoke in the workplace without retaliation of any kind. An employer, may totally prohibit smoking at its work place, therefore, as far as our law stands, there is no right to smoke at the workplace.

Thus, the employer has to ensure that the smoking policy complies with said framework. Thus, employees have to protected from tobacco smoke in the workplace.

We have to ask ourselves the following question: If the employer fails to implement a smoking policy, which complies with the above framework, or if the employer fails to react to the complaints of employees regarding smoking in the workplace, and said employee resigns from employment, can it be said that such failure constitute constructive dismissal?

The only case law that I could find on this particular topic is the matter of Naude and Stealth Marine (2004) 13 MEIBC 6.13.3. 

The applicant had respiratory problems and previous serious health conditions, which included asthma attacks as a result of smoking and she had an allergy to cigarette smoke.
 

The employer’s premises had no designated smoking areas. The reception area was situated downstairs and the administrative offices were situated upstairs. The factory was outside. Staff smoked in the corridors, in the reception area and in their offices upstairs. Smoke often trickled down from the upstairs offices, into the reception area.

Within two weeks of commencing employment the applicant developed a reaction to the cigarette smoke and got sick. The applicant had a tight chest and difficulty breathing and developed nausea, headaches and light-headedness. She complained about the smoking to her boss and informed the employer about her allergy and the fact that she would develop serious health problems if staff did not stop smoking inside the building. Her supervisor said she would address the problem, but the smoking in open areas persisted. To make matters worse, her superior promised to ask the staff to stop smoking inside the premises, but he himself continued to smoke inside. The staff also continued to smoke inside the building. The applicant complained to her direct supervisor every day and on 29 April the applicant left early, as she could not tolerate the smoke any more. When she returned on the 30th, four people were again smoking inside the building. The applicant advised her boss that she had to leave, as she was unable to continue to work under the circumstances.

The commissioner found that, in terms of the Tobacco Products Control Act 83 of 1993 smoking is not allowed in offices or in public areas in workplaces. Smoking is only allowed in designated areas and it is the duty of an employer to ensure that the Act is complied with. On the applicant’s version the respondent failed to implement antismoking legislation in the workplace. The employer’s actions were therefore unlawful in allowing employees to smoke inside the administration building. It is important to note that the applicant in this case was not the average, healthy, non-smoking employee who was indignant at the fact that her employer was not complying with antismoking legislation. The applicant was previously a heavy smoker and had developed serious respiratory problems and an allergy to cigarette smoke as a result of her habit. The applicant developed debilitating physical symptoms when exposed to cigarette smoke. On the evidence before the commissioner, the respondent created an intolerable working environment for the applicant. The applicant was unable to be productive.

In the view of the commissioner, the applicant has proved that she was dismissed and that the respondent created an intolerable situation at the workplace that forced her to resign.

The warning is clear: Employers have to take smoking policies seriously, especially the complaints of non-smoking employees.

What is constructive dismissal?

Definition of constructive dismissal

Constructive dismissal means the employee resigns and claims that the resignation occurred as a result of the employer's intolerable conduct. The employee further claims that he actually did not want to resign. Because of the fact that the employee alleges that the resignation was involuntary and was intentionally or unintentionally coerced by the employer, the resignation thus becomes a constructive dismissal.

Requirements to establish constructive dismissal:

To convince an arbitrator or judge that unfair constructive dismissal has taken place the employee must show that:

• The employment circumstances were so intolerable that the employee could truly not continue to stay on;
• The unbearable circumstances were the cause of the resignation of the employee;
• There was no reasonable alternative at the time but for the employee to resign to escape the circumstances;
• The unbearable situation must have been caused by the employer;
• The employer must have been in control of the unbearable circumstances.

Section 186 (1) (e) of the Labour Relations Act includes in the definition of dismissal the situation where "… an employee terminated a contract of employment with or without notice because the employer made continued employment intolerable for the employee".

It should be noted that not all questionable acts of the employer will always constitute unfair constructive dismissal. This will depend on the extent to which the employer's conduct falls within the five tests for constructive dismissal as set out above.

Interpretation of the 5 (five) tests:

Employers need to be careful in interpreting the meaning of these five tests.

For example, test number 3, where the employee must show that he had no reasonable alternative but to resign, must not be simplistically interpreted.

For instance, it is often the case that the employee theoretically has the option of remaining in the employment relationship and referring an unfair labour practice to the CCMA or other tribunal.

Where the employee fails to do so and resigns instead, this will not always mean he has failed test number 3. Passing this test will depend a great deal on whether, under the circumstances at the time, the employee could reasonably have been expected to stay in the employer's employ for purposes of referring the unfair labour practice dispute.

Truly unendurable circumstances would make such a route unreasonable.

Employees must be equally careful not to misinterpret the law. Where, for example, an employer notifies an employee of a disciplinary hearing, this could genuinely be seen as unbearable to the employee.

However, a resignation by the employee for purposes of avoiding the disciplinary hearing is unlikely to constitute unfair constructive dismissal.

For example, in the case of Mvamelo vs AMG Engineering (2003,11 BALR 1294) the employee was informed he was to face a disciplinary hearing for theft and that criminal charges would also be laid. He resigned and claimed constructive dismissal, but lost the case because it was found by the arbitrator that he had resigned to avoid the disciplinary steps of which he had been notified.

However, where disciplinary steps have been taken unfairly and this renders the employment circumstances intolerable, this can constitute constructive dismissal. In the case of Solidarity obo Van Der Berg vs First Office Equipment (Pty) Ltd (2009, 4 BALR 406) the employee was found to have been performing his work poorly. As a result the employer decided to stop paying him his salary and replaced it with a commission structure.
The employee resigned and went to the CCMA, where it was found that the employee had been a victim of unfair constructive dismissal. This was because the employee could not be expected to continue employment under such intolerable circumstances.

Conclusion

It is not possible to outline each and every possible act of constructive dismissals. Each case must be evaluated on its own merits.