Want to keep working after reaching retirement age? Here’s what the law says

Can you keep working after reaching normal retirement age?

This has become an important question in a society where people have not saved enough to retire or simply enjoy working and want to stay employed because they are also healthy enough.

Labour law does not stipulate what the normal retirement age is. You agree with your employer when that will be and it is usually part of your employment contract. That is where the question arises whether an employer consented to an agreed retirement age if employees are allowed to keep working after reaching this age.

The Labour Court had the last say on the matter and recently found that it is fair for an employer to dismiss employees who have reached and worked beyond the normal retirement age, and that employers do not waive their rights to enforce the normal retirement age when they serve salary adjustment letters to employees when they reach the normal age of retirement.

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Labour Court on retirement age

In this case, the employment contract of the employees indicated that their retirement ages are regulated by their pension fund rules, Jacques van Wyk, director of Werksmans Attorneys and Andre van Heerden, senior associate writes with candidate attorneys Kelly Sease and Danelle Plaatjies.

According to the pension fund rules, members of the pension fund can continue working after the normal retirement age, but no later than the age of 67. After allowing the employees to work after the normal retirement age, the employer enforced the normal retirement age and served the employees with retirement notices.

The notices informed them that they had reached their retirement age and as a result, their employment contracts would be ending. The employees then lodged grievances challenging the company’s decision to enforce the retirement age.

They argued that the employer consented to them remaining in service beyond the normal retirement age.

They tried to prove this by submitting letters from their employer about the decision to approve annual salary increases, arguing that the letters, issued after they reached normal retirement age, constituted tacit consent to allow them to remain in service after reaching normal retirement age.

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Did employment end at normal retirement age?

Their employer contended that their employment automatically ended when they reached the normal retirement age of 60, as stipulated in their contracts of employment and that there had been no written amendment to provide a termination date after the normal retirement age of 60.

However, the Labour Court found that the employer’s contention that the contracts of employment automatically terminated had no merit as the employees had continued to render services, but also that the employees’ contention that the salary adjustment letters constituted consent to extend the retirement age to 67 was “a bit of a stretch”.

According to the Labour Court the scope of the letter was limited to the amendment of the employees’ salaries and nothing more. The court affirmed that the normal retirement age remained as stated and therefore, an agreed retirement age could not be relied upon as the agreed retirement age, and the normal retirement age were mutually exclusive.

The Labour Court further relied on case law that confirmed that once reached, the normal retirement age cannot be reversed unless the normal retirement age is replaced by a new agreement and that unless an employer specifically waived its rights to apply the retirement age, the employer is entitled to place the employee on normal retirement at any time after the employee reached the normal or agreed retirement age place.