Tag Archives: Early retirement age in south africa

What is the retirement age in South Africa?

The question of retirement age in South Africa
can be thorny at best.

YEI unpacks the topic of the retirement age in South Africa

Baby boomers are retiring in their scores. The only issue is that many baby boomers are not ready to retire, mostly because of financial reasons. but also because they are not ready to be “put out to pasture”. Boomers want to keep active in their areas of expertise, skill, and knowledge. Way before the “Big Birthday” looms, employers and employees need to have their ducks in a row in order to prevent any uncertainty, trouble, and dispute.

As comedian George Burns said: “Retirement at 65 is ridiculous! When I was 65, I still had pimples!”.

First things first. You cannot be forced to retire unless this is specified in your employment contract. If you do not have an employment contract that specifically speaks about the retirement age, you cannot be discriminated against because of your age and you should be allowed to work for as long you are physically and mentally able. But it really is in your best interests and the best interests of the company to agree on a retirement age.

Let’s unpack all of those statements:

Labour Relations Act

The Labour Relations Act, section 187 (1) (f) cites that in the absence of an employment contract specifying retirement age, dismissalof an employee based on his/her age is automatically unfair. This kind of dispute can be taken to the Labour Court and it is possible that should the employee win the case, compensation will be awarded in an amount of up to 24 months of the employee’s remuneration.

Employment contract with employer,
stipulating retirement at a certain age

If you have a retirement age stipulated in your employment contract, then that’s it. Be prepared to pack up and go on retirement, making sure you make preparation for retirement and leaving the workforce.

But what is the legally required retirement age?

The Basic Conditions of Employment Act does not prescribe an age at which employees should retire. Labour legislation is silent on determining the retirement age. Could it be 55, 60 or 65? It is therefore up to the employer to prescribe the retirement age for its employees with the best and safest course of action, having a formal retirement policy in place, and a written agreement with every employee specifying a compulsory retirement date.

Agreement with employer on retirement age, or company norm

If retirement age is not stipulated in your contract, but it has been agreed, and there is a company norm, then the employer is well within their rights to give you a notice period, which will equal that of a notice period for termination of employment, as set out in your employment contract. A company or organisational norm will generally be found in the company policy or in the rules of the provident or pension fund rules pertaining to the company.

No agreement and no mention of retirement in your contract

What now? No mention of a retirement age in your agreement or contract, and there is no company or organisational norm? The courts have found that it is unfair discrimination for your services to be terminated, purely because of your age. You should be able to continue to work until such time as it is proven that you are unable to do your job properly. Terminated contracts have to be in line with labour legislation i.e. due to misconduct, operational requirements or incompetence.

Unfair treatment

Penny van den Berg, HR Specialist Consultant at Optimise HR, says: If you believe that you have been unfairly treated by your employer, then you can lodge a complaint with the CCMA which ensures that all employees are treated fairly. Other than time, it costs you nothing to lodge a complaint and you don’t need to incur any legal costs.”

Working post-retirement age

It is in the best interests of the employer and the employee to clearly define and record the terms of employment after retirement age has come and gone. Issues like how long the employee can work for, and what notice period is required regarding termination of employment need to be laid out in an extended employment contract.

Older Person’s Grant

Social grants are administered by the South African Social Security Agency (Sassa). This does include the Older Person’s Grant. Social grants in South Africa are currently ‘means tested’. The means test is the process of assessing the value of your assets and income. You will only be eligible for a grant if your income and assets fall below a certain threshold.

More Information on UIF

Can I claim UIF if I retire South Africa?

UIF Act and Retirement: There are no benefits linked to age or retirement at all in the UIF Main Act that relates to the benefits payable. Unemployment benefits are strictly intended for employees who have involuntarily lost their employment.

There are the 5 pillars of benefits under which you can apply for benefits:

  • Unemployment benefits
  • Illness benefits
  • Maternity benefits
  • Adoption benefits
  • Dependants’ benefits

The purpose of UIF is to accommodate workers who have (involuntarily) lost their job or income due to retrenchment and dismissal, (illness or pregnancy, adoption and death).

A quick summary of when you can claim from the 1st pillar are the following:

  • Your contract of employment has been terminated;
  • Your fixed term contract has ended and not been renewed;
  • You’ve been dismissed (or fired) from your job, as defined by section 186 of the Labour Relations Act ’95;
  • You or your employer has been declared insolvent, in terms of the Insolvency Act, 1936;
  • Your contract of employment has been terminated by the death of your employer;

And you’re registered as a work-seeker with a Labour Centre And you are capable of and available for work.

At the end of each month, the employer is required to submit a declaration to the Department of Labour containing one of the following reasons and if an employee had left your employment one of the following (yellow) reason codes would be on the UI19

The following employment status codes are valid:
01: Active
02: Deceased (death benefits)
03: Retired
04: Dismissed
05: Contract ExpiredUIF Act and Retirement
06: Resigned
07: Constructively Dismissed
08: Employer’s Insolvency
09: Maternity / Adoption Leave
10: Illness Leave
11: Retrenched
12: Transfer to Another Branch
13: Absconded
14: Business Closed

If the reason code is 03 – Retired – no unemployment benefits are available online. However, if the employee believes that they are entitled to benefits, the employee is asked to visit the office with a completed UI2.11, signed by the employer, on which they have declared whether the contract was terminated by the employer or the employee. If the employee has terminated the contract, or has agreed to the termination of contract, there are no benefits due, only if the employer has stated that there was an involuntary benefit.

There is confusion as to the reasons when the DOL see a reason ‘code 03’, and there have been discussions around whether it should say, voluntary retirement, i.e. no benefits due.

Below is an extract that makes it pretty clear what the intention of the act is:

If I decide to retire at 60 instead of 65 can I claim UIF?

There is a difference between unemployed, and being retired. The purpose of UIF is to tie over workers who have (involuntarily) lost their job or income due to retrenchment, dismissal, illness or pregnancy. It is implied that these workers will attempt to get back into the job market. If you retire early, you do so voluntarily, with the assurance that you have a pension to support you. So early retirement does not entitle you to a UIF benefit, otherwise everyone would be doing it.

More Information on UIF