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[2022] ZALAC 103
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Motor Industry Staff Association and Another v Great South Autobody CC t/a Great South Panel Beaters (JA68/2021) [2022] ZALAC 103; (2022) 43 ILJ 2326 (LAC) (27 September 2022)

IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
No
:
JA68/2021
In
the matter between:
MOTOR
INDUSTRY STAFF ASSOCIATION
First Appellant
WILLEM
FREDERICK LANDMAN
Second Appellant and
GREAT SOUTH AUTOBODY CC
T/A
GREAT SOUTH PANEL BEATERS
Respondent
Heard:
12 May 2022
Delivered:
27 September 2022
Coram:
Waglay JP, Coppin JA et Setiloane AJA
Summary:
Interpretation - section 187(2)(b) of
the LRA -
Properly
construed it affords an employer the right to fairly dismiss an
employee based on age, at any time after the employee has
reached his
or her agreed or normal retirement age. This right accrues to both
the employee and the employer immediately after
the employee’s
retirement date and can be exercised at any time after this date.
JUDGMENT
KATHREE-SETILOANE
AJA: (Waglay JP and Coppin JA concur)
[1]
This
is an appeal against the judgment and order of the Labour Court (Van
Niekerk J) dismissing the second appellant’s claim
that his
dismissal by the respondent, Great South Autobody CC t/a Great South
Panel Beaters (respondent), was automatically unfair
as it was based
on his age, and this constitutes unfair discrimination in terms of
section 187(1)(f) of the Labour Relations Act.
[1]
Background
[2]
The
parties
filed
a
statement
of
case
in
the
Labour
Court
in
which
they
agreed on the following facts:
2.1
The second appellant commenced employment
with the respondent during November 2007. On 30 January 2008, they
entered into a written
employment agreement which inter alia stated
that the second appellant’s retirement age is 60 years of age.
He turned 60
years old on 15 March 2018. The respondent did not
retire him when he turned 60. The second appellant therefore
continued to render
his services to the respondent as usual, and the
respondent continued to pay him his usual salary.
2.2
The second appellant continued to work for
the respondent for the remainder of 2018, and the respondent never
once raised the issue
of his retirement in that time. However, on 14
January 2019, the respondent wrote to the second appellant informing
him that his
services would terminate with effect from 12 February
2019 as he had reached the agreed retirement age of 60. By this
point, the
second appellant was already 60 years and nine months old.
His last day of employment with the respondent was 12 February 2019.

It is common cause that the respondent dismissed the employee due to
his age.
2.3
The second appellant is a member of the
Motor Industry Provident Fund (Fund). The Motor Industry Provident
Fund Collective Agreement
provides that the retirement age of an
employee who is a member of the Fund is 65.
Labour Court Judgement
[3]
The
second appellant, with the assistance of the first appellant,
referred an automatically unfair dismissal dispute to the Labour

Court contending that his dismissal constituted unfair discrimination
in terms of section 187(1)(f) of the LRA, because it was
based on his
age.
[2]
[4]
The Labour Court delivered a succinct
judgment in which it held as follows:
‘
In
short, the principle established in [
Schweitzer
v Waco Distributors (A Division of Voltex (Pty) Ltd
]
[3]
is that a dismissal based on age is not automatically unfair in
circumstances where the employee
“has
reached”
the normal or agreed retirement age (own emphasis). This wording [in
section 187(2)(b) of the LRA] contemplates a dismissal on
account of
age that occurs after the retirement date and insulates that
dismissal against any assertions of unfairness.’
[4]
[5]
Additionally,
the Labour Court held that since the second appellant had already
reached the agreed retirement age of 60 at the time
of his dismissal,
section 187(2)(b) of the LRA applied. It also held that it was of no
assistance to the second appellant to rely
on the contract based
assertions that a tacit employment agreement was entered into after
he turned 60; that the employer waived
the right to rely on the
retirement age stipulated in the contract; and that the employment
agreement was tacitly amended to the
effect that the second appellant
would continue to work indefinitely or at least until age 65.
[5]
[6]
The Labour Court accordingly dismissed the
appellant’s automatically unfair dismissal dispute.
[7]
The appeal is before this Court with the
leave of the Labour Court.
The Appeal
Parties’
Submissions
[8]
The appellant’s argument is broadly
that when an employee reaches the agreed retirement age and he
continues to work for the
employer, the employer cannot thereafter
rely on the (previous) agreed retirement age, as the employment
contract terminates by
agreement. Where the employee continues to
work for the employer after reaching the agreed retirement age, and
neither party relies
on the fact that the employee reached his agreed
retirement age, a new (second) employment contract comes into
existence (by virtue
of the parties’ conduct) which governs
their employment relationship. In these circumstances, it is
impermissible for the
employer to rely on the retirement clause as
per the first employment contract, as the employment relationship is
now governed
by the terms of the new employment contract.
Consequently, any dismissal based on age will constitute an
automatically unfair dismissal
unless the employer can, in terms of
section 187(2) (b) of the LRA, either prove that, the parties had
agreed on a new retirement
age or, there is a normal retirement age
that applies to that employee. To allow an employer to rely
indefinitely on an agreed
retirement age, i.e., months or years after
the employee reached his retirement age effectively puts the employee
at the mercy
of the employer and is open to abuse.
[9]
The respondents contend, to the contrary,
that once an employee reaches the agreed retirement age, the employer
can anytime, thereafter,
rely on the agreed retirement age to dismiss
the employee, even if the employee worked for a substantial time for
the employer
after he had reached the agreed retirement age. On the
facts of this case, the employee’s employment contract
contained a
retirement age of 60 years which he reached during March
2018. The respondent was, therefore, entitled to retire the employee
during
January 2019 in terms of the agreed retirement age, and in
terms of section 187 (2)(b) of the LRA the dismissal was fair.
The Cause of Action
and Defence Advanced
[10]
In terms of section 187(1)(f) of the LRA, a
dismissal is automatically unfair if the reason for the dismissal is
that the employer
unfairly discriminated against an employee,
directly or indirectly, on any arbitrary ground, including, but not
limited to,
inter alia
age.
However, in terms of section 187(2)(b) of the LRA, “
a
dismissal based on age is fair if the employee has reached the normal
or agreed retirement age for persons in that capacity
”.
[11]
The second appellant’s cause of
action (as set out in his statement of case) is that the respondent
dismissed him based on
his age and, in doing so, unfairly
discriminated against him on the grounds of his age in terms of
section 187(1)(f) of the LRA.
He avers that in the light of the
respondent’s failure to retire him when he reached his agreed
retirement age
on
15
March
2018,
it
had
waived
the
right
to
rely
on
the
retirement  clause in the employment
contract, alternatively, a (new) second contract came into existence
which did not contain
a retirement age or at best for the respondent
contained a retirement age of 65.
[12]
The respondent invoked the defence in
section 187(2)(b) of the LRA. It denied that the parties had waived
the retirement clause
in the employment contract and that the parties
had entered into a tacit second agreement.
Interpretation of s
187(2)(b) of the LRA
[13]
The
interpretation of section 187(2)(b) is central to this dispute. It
must be interpreted in accordance with the established approach
to
statutory interpretation in
Natal
Joint Municipal Pension Fund v Endumeni Municipality.
[6]
[14]
Section 187(2)(b) of the LRA is clear and
unambiguous. On its ordinary meaning, once the employer proves that
the dismissed employee
has reached the agreed or normal retirement
age, the dismissal is deemed fair. The use of the phrase “
if
the employee has reached his agreed or normal retirement age
”
is decisive in denoting that for the dismissal in terms of section
187(2)(b) to be fair, the employee must have passed his
or her normal
or agreed retirement age.
[15]
Section 187(2)(b) does not prescribe a time
frame within which the dismissal should take place, provided it is
after the employer
has reached his or her agreed or normal retirement
date. Properly construed, section 187(2)(b) affords an employer the
right to
fairly dismiss an employee based
on
age,
at
any
time
after
the
employee
has
reached
his
or
her agreed or normal retirement age. This
right accrues to both the employee and the employer immediately after
the employee’s
retirement date and can be exercised at any time
after this date. The focus is not so much on when the employee
reached his or
her retirement date, but rather that the employee has
already reached or passed the normal or agreed retirement age.
[16]
For a dismissal in terms of section
187(2)(b) of the LRA to be insulated against a claim of unfair
discrimination on the grounds
of age, the reason for, or proximate
cause of the dismissal must be that the employee has already reached
retirement age. The appellants
contend that if an employer is
permitted, on the employee having reached his or her retirement age,
to rely indefinitely on an
agreed or normal retirement age, this will
leave the employee in a vulnerable position by enabling the employer
to abuse its position
to dismiss the employee based on his age. I
disagree. On a proper construction of section 187(2)(b) read in the
context of the
LRA, it is impermissible for an employer to invoke the
defence in section 187(2)(b) where the real reason for the dismissal
is
based on operational requirements or misconduct or incapacity. For
example, if the most proximate cause of the dismissal is proven
to be
one based on operational requirements and not age, as contemplated in
section 187(2)(b), then it will be open to the Labour
Court to,
inter
alia
, order the employer to pay the
employee severance pay.
[17]
Section 187(2)(b) of the LRA contemplates
that where an employee continues to work for the employer
uninterrupted after reaching
retirement age, the employment
relationship and employment contract continue. In other words, for
purposes of a dismissal in terms
of section 187(2)(b), the employment
contract does not terminate by the effluxion of time when the
employee reaches his or her
retirement age but is deemed to continue.
This effectively means that the agreed or normal retirement age of
the employee remains
unchanged.
[18]
On
this interpretation, a dismissal contemplated in section 187(2)(b)
would have the same meaning as the definition of dismissal
in section
186
[7]
of the LRA, which does
not include the termination of a contract by effluxion of time as the
latter is not a dismissal. Properly
construed, section 187(2)(b) does
not contemplate a new tacit contract coming into existence between an
employer and employee (by
virtue of their conduct) which governs
their employment relationship when the employee continues to work for
his or her employer
after reaching the normal or agreed retirement
age. In the same vein, section 187(2)(b) does not envisage a tacit
amendment of
the contract to the effect that the employee would
continue to work indefinitely or that a new retirement age applies,
as is contended
for by the appellant in this appeal.
[19]
This interpretation gives effect to the
right that accrues to an employer in terms of section 187(2)(b) to
fairly dismiss an employee
who has passed the agreed or normal
retirement age. Significantly, it is consistent with the purpose of
section 187(2)(b) which
is to allow the employer to dismiss employees
who have passed their retirement age to create work opportunities for
younger members
in society.
[20]
I
disagree with the appellants’ submission that this
interpretation of section 187(2)(b) of the LRA is inconsistent with
the right to fair labour practices in section 23 of the
Constitution
[8]
because an
employee’s right to a fair dismissal is integral to that right.
There is a distinction in the value that informs
the content of
fairness relative to employees who have reached retirement age and
those who have not. While the dismissal of an
employee, on the
grounds of age, prior to reaching retirement age may have the effect
of impairing the right to human dignity of
that employee, the
dismissal of an employee who has passed his or her retirement age
would not. This is because employees with
agreed or normal retirement
dates anticipate that they will work until they reach retirement age
and are expected to prepare financially
for their retirement by
contributing to provident or pension funds.
[21]
It is not unfair, in these circumstances,
for the legislature to expect employees with agreed or normal
retirement ages to work
until reaching retirement age or for as long
as the employer can accommodate them after reaching that age.
Construing section 187(2)(b)
in a manner that allows an employer to
create opportunities for a younger and more innovative workforce,
especially in a country
such as ours with unprecedented unemployment
levels, is not inconsistent with the spirit, purport, or objects of
the right to fair
labour practices in section 23 of the Constitution.
[22]
The
right that accrues to an employer in terms of section 187(2)(b) of
the LRA to dismiss an employee who continues to work after
reaching
the retirement age is
sui
generis
.
It is therefore unhelpful, as the appellants would have us do, to
attempt to apply the principles established in court decisions
which
apply to a new contract that was tacitly entered into after the
expiry of a fixed term contract, that expired for reasons
other than
that the employee had reached his or her retirement age. The
appellant’s reliance on
Department
of Agriculture, Forestry & Fisheries v Tefo
[9]
(
Tefo
)
is thus misplaced. In
Tefo
,
this Court held that where an employee continues to render services
to an employer after the expiry of a fixed term contract and
receives
remuneration for rendering those services, the contract is deemed to
be tacitly relocated and novated to one of infinite
duration that is
terminable by reasonable notice by either party.
[23]
The
appellants’ reliance on
Karan
t/a Karan Beef Feedlot v Randall
[10]
(
Karan
Beef
)
is equally misguided as it is distinguishable from the case at hand.
In
Karan
Beef,
the
employee had a retirement age of 60. Prior to turning 60, the
employer indicated to the employee, in two letters, that it would
like
him
to
continue
to
work
for
Karan
Beef
Feedlot
and
that
the
normal notice period would apply if they wanted him to go on
retirement. The employee did not respond to the letters but continued

to work for the employer after he reached the age of 60.
Approximately 2 years later, the employer dismissed the employee on
the
basis that he had reached the retirement age of 60. This Court
held that the employee “
tacitly
agreed to work beyond the normal retirement age and left it to [Karan
Beef] to determine the retirement age or date on notice
to the
respondent
”.
[11]
[24]
This
Court observed that there are possibly two scenarios in which
187(2)(b) confers protection to an employer to dismiss an employee

fairly. The first scenario is where an employee has reached the
normal or agreed retirement age but continues to work for the
employer, and the second is when an agreement is reached between the
employer and employee to determine a new retirement age before
the
latter has reached the normal or agreed retirement age. Consequently,
in the latter instance, the employer would continue to
enjoy the
protection of section 187(2)(b) of the LRA, should it terminate the
employment of the employee once the new agreed employment
date is
reached.
[12]
[25]
Notably,
this Court concluded in
Karan
Beef
that
section 187(2)(b) was applicable, and that by reserving the right in
the two letters to decide when the employee should retire,
the
employer was entitled to terminate the employee’s services two
years after the parties had agreed that the employee would
continue
working beyond the normal retirement age.
[13]
[26]
The
approach adopted by the Labour Court in
Schweitzer
v Waco Distributors (A Division of Voltex (Pty) Ltd)
[14]
to
determine whether a dismissal in terms of section 187(2)(b) of the
LRA is fair remains good law. There the Court held that for
a
dismissal in terms of section 187(2)(b) of the LRA to be fair, the
following three conditions must be present: (a) the dismissal
must be
based on age; (b) the employer must have an agreed or normal
retirement age for employees employed in the capacity of the
employee
concerned; and (c) the employee must have reached the normal or
agreed retirement age.
[15]
[27]
On the facts of this case, it is common
cause that the second appellant’s dismissal was based on age.
The agreed retirement
age of 60 applied to him as well as to other
employees who worked in the same capacity. He had reached the agreed
retirement age
nine months prior to his dismissal. Consequently,
section 187(2)(b) rendered the dismissal fair. Thus, bearing in mind
the second
appellant’s cause of action, that he was unfairly
discriminated against on account of his age, I am of the view that
the
Labour Court cannot be faulted for concluding that “
the
defence established by section 187(2)(b) comes into play and serves
to non-suit the [second appellant]
”.
[28]
Where
an employer expressly permits an employee to work beyond the agreed
or normal retirement age, this does not constitute a waiver
of the
right to dismiss that employee in terms of section 187(2)(b) of the
LRA, unless waiver of that right can be inferred from
the clear and
unequivocal conduct of the employer.
[16]
Equally, an employer’s failure to take steps to secure the
retirement of his employee on reaching the agreed or normal age
of
retirement, does not constitute a waiver of its right, in terms of
section 187(2)(b), to dismiss that employee any time after
he or she
has reached retirement age unless such waiver can be inferred from
the clear and unequivocal conduct of the employer.
There is nothing
in the conduct of the respondent, in this case, from which it can be
inferred that: (a) by allowing the second
appellant to work beyond
his agreed retirement date, it waived its right, in terms of section
187(2)(b) of the LRA, to dismiss
the second appellant on the basis
that he had reached the agreed retirement age
of
60
or
(b)
it
waived
the
second
appellant’s
agreed
or
normal
retirement
age.
[29]
Lastly,
there is nothing in the conduct of the parties which remotely
suggests that a new tacit contract, to the effect that the
second
respondent would continue to work indefinitely or to at least the age
of 65, was entered into by the parties.
[17]
For these reasons, the Labour Court correctly concluded that the
contract-based arguments advanced by the appellant in the Labour

Court “
have
no traction
”.
[30]
The second appellant contends that he has
lost his retirement benefits because he was dismissed before he
reached 65. The second
appellant’s expectation that he would
work for the respondent indefinitely or to age 65 is misconceived as
he understood
his retirement age was 60 long before reaching that
milestone. He was reasonably expected, in the circumstances, to take
the necessary
steps to prepare for retirement.
[31]
To reiterate, on reaching his retirement
age on 15 March 2018, the employment relationship between the second
appellant and the
respondent continued uninterrupted. Pursuant to
section 187(2)(b), the respondent was entitled to dismiss him on the
grounds that
he had passed his agreed retirement age. Accordingly,
the second appellant’s dismissal was not automatically unfair.
Costs
[32]
In terms of section 162 of the LRA, I
consider it fair and just not to make a costs order in this case.
Order
[33]
In the result, the following is ordered:
1. The appeal is
dismissed.
F
Kathree-Setiloane AJA
Waglay
JP and Coppin JA concur.
APPEARANCES:
FOR
THE APPELLANTS:

GJ Eberhsohn
Instructed by Gerrie
Eberhsohn Attorneys Inc
FOR
THE RESPONDENT:

RJC Orton
Instructed by Snyman
Attorneys
[1]
No.66
of 1995, as amended.
[2]
The
issues for determination by Labour Court as articulated in the
stated case were as follows: ‘1.1 Whether a new employment

contract between the second appellant and the
respondent
came into existence after he reached the age of 60.
1.2
In the event of a finding that a new
employment contract did not come into existence, the court is
required to determine:
(a)
whether the employee and the respondent
waived the retirement clause in the employment contract by allowing
the employee to work
after he reached the age of 60, and/or
(b)
whether the employee and the respondent
tacitly amended the employment contract so that the agreed
retirement age of 60 no longer
applied; and
1.3
whether the respondent was permitted in
law to rely on the retirement age clause by virtue of the
application of section 187(2)
(b) of the LRA’.
[3]
Schweitzer
v Waco Distributors (A Division of Voltex (Pty) Ltd)
(1998)
19 ILJ 1573 (LC) (
Schweitzer
).
[4]
Schweitzer
at
para 6.
[5]
Schweitzer
at
para 7.
[6]
In
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) the Supreme Court of Appeal held at para 18:
“consideration must be given to the language used in the light
of the
ordinary rules of grammar and syntax; the context in which
the provision appears; the apparent purpose to which it is directed

and the material known to those responsible for its production…
A sensible meaning is to be preferred to one that leads
to
insensible or unbusinesslike results or undermines the apparent
purpose of the document”. Approved by the Constitutional
Court
in
Airports
Company South Africa v Big Five Duty Free (Pty) Ltd and Others
2019
(5) SA 1
(CC) at para 29 and
Road
Traffic Management Corporation v Waymark Infotech
(Pty)
Ltd
2019 (5) SA 29
(CC) at para 29.
[7]
In
terms of section 186 of the LRA “dismissal” means,
inter
alia
,
termination of an employment contract with or without notice.”
[8]
Constitution
of the Republic of South Africa, 1996.
[9]
(2020)
41 ILJ 2086 (LAC) at para 20.
[10]
(2012)
33 ILJ 2579 (LAC).
[11]
Karan
Beef supra
at
para 18.
[12]
Karan
Beef
at
paras 19 and 20
[13]
Karan
Beef
at
para 22.
[14]
Schweitzer
supra.
Schweitzer
concerned
an unfair dismissal claim in circumstances where the employee had
continued to be employed beyond his retirement age
of 65
.
The
employer invoked section 187(2)(b) contending that it was entitled
to terminate the employee’s employment on the ground
that his
age exceeded the agreed retirement age.
[15]
Schweitze
r
at para 27.
[16]
Road
Accident Fund v Mothupi
2000
(4) SA 38
(SCA) par 15.
[17]
The
facts in this case are distinguishable from those in
Datt
v Gunnebo Industries (Pty) Ltd
[2009]
5 BLLR 449
(LC) where the employee had signed a revised agreement
shortly before turning 65 years old setting the normal retirement
age
at 65 but with the option to continue working with the agreement
of the employer. On turning 65, the employer requested the employee

to continue working “
until
such time as we mutually agree that you should take retirement
”.
Two years later the employer notified the employee that he must
retire. The Labour Court held that this constituted an
automatically
unfair dismissal because the new agreement had extended the
retirement age to an unspecified date and precluded
the employer
from relying on the defence afforded by section 187(2)(b) of the
LRA.