How to deal with the retirement of employees

    In the life-cycle of employees at a company, there are many milestones that are achieved.  One of these milestones, and usually the last one, is retirement.  We received a lot of enquiries with regard to the actual or industry norm when it comes to retirement age.

    The retirement age is not addressed by either the Basic Conditions of Employment Act or the Labour Relations act.  Because of this lack of regulation, the retirement age must be regulated by the internal policies of the Company or the Employment Contract that has been signed between the parties.  There are various possibilities that can arise with determining the retirement age of an employee.

    The norm or general accepted age for retirement through the different industries are either 55, 60 or 65.

    The best practice for your company will be to review your company policy on retirement, should your employment contracts not contain the information already.

    Should your company have an agreed age included in its policies and employment contract, you may terminate the agreement when the predetermined age is reached by the employee.  This notice is nothing different from a normal notice of termination.  The employment contract will also automatically terminate at the end of the calendar month in which the employee reaches the retirement age.

    Should you not have a agreed upon retirement age in your company, you can adopt the retirement age of pension fund.  The Gauteng Building Industry Pension Fund (GBI) has the age set at 60.  It is advisable that you make reference in your employment contract, that you are using the retirement age of a specific pension fund.

    The Procedure to follow now when introducing an agreed upon retirement age, if you do not have one in place is as follows:

    1. Inform the Employees that you are implementing a normal retirement age in the company and request their inputs.
    2. Listen to suggestions or concerns by employees regarding the retirement age;
    3. Issue a notice to staff regarding the new agreed upon retirement age;
    4. Remind the employee as a matter of courtesy that he/she is approaching the retirement age. Keep these letters to ensure that you have complied with procedure.

    It is permissible to keep your employees on after they have reached the retirement age (in the instance where there is no determined retirement age in the Employment contract).  The employee that has passed the predetermined retirement age, can be dismissed at any time, as long as the reason for dismissal is due to exceeding of the normal retirement age.

    When there is a predetermined age in the employment contract, it is advisable to sign an agreement for shorter periods of time wherein the Employee can continue his or her employment, usually on a month to month basis.

    The Legal and Contractual Department of the MBA North will be able to assist you in updating your policies and employment contracts. Kindly contact Enwee Human, Legal and Contractual manager (legal@mbanorth.co.za) to assist you herein.

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