Tuesday, July 21, 2009

Early retirement

Early retirement

What can an employer do if it wants an employee to take early retirement?

If there is an employment contract it should provide for the age of retirement. In that event the employee is contractually bound to retire when he reaches that age.

If there is no contract governing retirement (or the contract is silent as to the retirement age) then by operation of law the age of retirement is between 60-65 years. If an employer wants an employee to take early retirement the parties must consult and agree on a reasonable date of termination. An employer may have to consider some sort of package deal, an early retirement (enhanced) package, or some other sort of compensation to persuade the employee to leave.

In Botha v Du Toit Very & Partners, the Labour Court accepted that the normal retirement age for persons employed in Botha’s position was 65. He was not retired upon his 65th birthday and the employer also did not discuss the issue of retirement with him at any stage. However, shortly before his 67th birthday, the employer gave him one month’s notice that he would be required to retire. The court held that while the employer was entitled to require Botha to retire, merely giving him one month’s notice was unfair. The employer should have consulted with him and attempted to reach agreement on the date that Botha would retire. Such consultation would have avoided surprise and indignation.


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