NORMAL RETIREMENT

Retirement is a source of contention in labour relations. Unbelievable as it may sound, there have been cases where employees have approached their employers with “new” birth certificates simply to prove that they haven’t reached their retirement ages. Some employees have claimed unfair discrimination simply because there were retired when others were afforded late retirement options. Despite the challenges that some might face, retiring employees is not as complicated as it may appear […]

Introduction

Retirement is a source of contention in labour relations. Unbelievable as it may sound, there have been cases where employees have approached their employers with “new” birth certificates simply to prove that they haven’t reached their retirement ages. Some employees have claimed unfair discrimination simply because there were retired when others were afforded late retirement options. Despite the challenges that some might face, retiring employees is not as complicated as it may appear.

In this article, the law behind retirement will be reviewed. The major questions to be answered in this article include:

  • What’s the retirement age in terms of Zimbabwean Labour Law?
  • What’s the source of law retirement?
  • Is the consent of the employee necessary?

Retirement definition

Retirement is when an employer terminates a contract of employment simply because an employee has reached a certain age limit. In Zimbabwe most companies set their normal retirement ages at 60 years and late retirement is normally set at 65 years.

In terms of the National Security Social Authority Scheme certain industries such as mining have their early retirement ages set at 55 years. Retirement at 55 is accordingly reserved for arduous tasks. These jobs include underground mining, cross boarder truckers etc.

Sources of law

Contracts of employment as well as Collective Bargaining Agreements are the major sources of retirement law. This means that employers and employees agree in writing that upon reaching a certain age limit the employee will be retired.

Pension regulations are also an important source of law. Organisations can set policies that ensure that their retirement age limits coincide with the pension regulations that apply in their industries. It is important to note that pension regulations may not be used as authority to retire an employee in the absence of an agreement between the parties.

In supporting this argument, the Supreme Court Matter between Mubvumbi and City of Harare[i] is authoritative. The courts in this matter held that:

“There is no basis upon which the respondent retired the appellant at 60. It was neither a specific term of the contract of employment between the parties nor a provision of any collective bargaining agreement that applied to him.”

It is therefore important that employers contemplating retiring their employees are conversant with the collective bargaining agreements obtaining in their industries. In the absence of a collective bargaining stipulation on this subject, it is best to come up with an agreement or a policy which states the age at which employees are going to retire. As mentioned above, another option is to fix, by agreement, the retirement age with that of the pension scheme that the organisation and its employees are subscribing to.

Employee consent

Arguments have been before our courts that consent of the employee ought to be required when retiring an employee. In support of such an argument one claimant has pointed that the employer should settle its arrears with the pension fund first and get consent of the employees in question, before opting to retire the employees.[ii] The courts have rejected this argument.

In Water and Allied Workers’ Union of Zimbabwe v City of Harare is was noted as follows:

“The respondent fixed the normal retirement age at 60 years and set 65 years as the late retirement age. The applicant agrees with that but contends that there was still a need on the part of the respondent to obtain consent from each of its members.  I disagree.”

It is argued that consent from either party is unnecessary because in normal cases every party to the employment relationship is deemed to be aware of the retirement age. When the day finally arrives, there will be no negotiation unless if the employer needs to further engage the employee. The financial issues in connection with unremitted pension monies do no have an impact on the legality of the decision to retire an employee.

Employers discretion to retire an employee

A situation that normally raises unfair discrimination claims is where employee A is age 63 and has not yet been retired pending late retirement age of 65 whereas employee B is age 60 and is retired. The question that arises is whether the employer’s discretion to retire employee B can be changed by the courts.  Can employee B question the discretion exercised by the employer in retiring him?

The importance of the employer’s discretion to retire employees has been emphasised by the courts in several occasions. In Water and Allied Workers’ Union of Zimbabwe v City of Harare[iii] the courts had the following to say:

“I agree that some members of the applicant were allowed to continue serving beyond the age of 60 years.  That would certainly have caused them to believe they would now fall under the late retirement age of 65 years. (i.e. legitimate expectation) I, however, venture to say, upon reaching the normal retirement age, members of the applicant served at the pleasure of the respondent. (Emphasis added)

In Godfrey Munyamo Jonga V Chief Executive Officer, Zambezi River Authority and Zambezi River Authority the employer declined a request by its employee to extend his retirement age from 60 years to 65 years. This did not go down well with the employee who felt that his retirement should be postponed for him to build his pension which had significantly reduced during the hyper inflationary period, which had culminated in the loss of value for most pension schemes. The court did not support the argument by the employee and proceeded to conclude that:

“In casu, the request for extension did not find favour with the first respondent and he explained why he could not accede to the request.  I did not find his reasons distant to a reasonable exercise of his discretion.  I am therefore, unable to interfere with the decision reached.”

It follows therefore that once an employer has exercised his discretion in a reasonable manner the resultant decision to retire an employee cannot be interfered with by a court of law.

Conclusion

The legal principles behind retirement of employees seem straight forward. What is important is for employees to be aware of when they will retire. The best way to provide for retirement provisions is to make use of the employment contract if this is not already provided for in a Collective Bargaining Agreement for the industry. It has also been noted that the employer does not need to get consent from the employees when retiring them. Consent is only requirement when the employer intends on engaging the employee beyond the period of retirement.  The discretion to retire an employee cannot be questioned. Once this discretion has been exercised in a reasonable manner it cannot be interfered with.

SOURCES:


[i] Mubvumbi v City of Harare (SC 64/18)

[ii] Water and Allied Workers’ Union of Zimbabwe v City of Harare (HH 238-15)

[iii] Godfrey Munyamo Jonga v Chief Executive Officer, Zambezi River Authority and Zambezi River Authority (HH 126-15)

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