Case  CCT 298/22 & CCT 346/22
[2024] ZACC 29

Hearing Date: 02 November 2023 (Thursday)

Judgement Date: 20 December 2024

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

Today the Constitutional Court handed down its judgment (which consolidated three judgments written by former Chief Justice Zondo, Justice Owen Rogers and Acting Justice David Van Zyl) in two matters. The matters were:

(a) Motor Industry Staff Association and Mr Willem Frederick Landman v Great South Autobody CC t/a Great South Panelbeaters; and

(b) Solidarity on behalf of Gerhardus Viljoen Strydom and five others v State Information Technology Agency SOC Limited (SITA)

The two matters raised similar legal issues. They all involved disputes about the dismissal of employees after the dates on which they had respectively attained the normal or agreed retirement age. In all cases the normal or agreed retirement age applicable to each employee was 60 years but the employers did not dismiss or retire the employees on the day that each employee attained the normal or agreed retirement age – but allowed the employee, after attaining the normal or agreed retirement age, to continue working as before and then dismissed or retired the employee either some months later or even more than a year or even two years later. The dispute between the unions and the employers was whether, in a case where there is a normal or an agreed retirement age between the parties, an employer who allows an employee to continue working as normal after reaching the normal or agreed retirement age is entitled to dismiss or retire the employee at any time after the date on which the employee attained or reached the normal or agreed retirement age.

The Labour Court, following a 1998 judgment in Waco handed down by Judge Zondo while in that court, concluded that an employer may dismiss an employee based on age at any time after the day on which the employee reached the normal or agreed retirement age. It, therefore, dismissed the unions’ claims that such dismissals were automatically unfair. Subsequent approaches to the Labour Appeal Court to have that decision of the Labour Court reversed were unsuccessful. The unions then applied to the Constitutional Court for leave to appeal against the decision of the Labour Appeal Court in the Landman case and the decision of the Labour Court in the Solidarity matter.

In the Constitutional Court three judgments were written. The first judgment was by Zondo CJ. Justice R Mathopo, Acting Justice M Chaskalson and Acting Justice A Schippers agreed with this judgment. Zondo CJ pointed out that the case was about interpreting section 187(2)(b) of the Labour Relations Act, 1995 (LRA). Section 187(1)(f) of the LRA provides that the dismissal of an employee based on age is automatically unfair. Section 187(2)(b) provides an exception to that provision. It is to the effect that a dismissal based on age is fair “if the employee has reached the normal or agreed retirement age” for persons employed in that capacity. The question for decision was, therefore, whether the phrase “…has reached the normal or agreed retirement age…” in section 187(2)(b) is confined to a situation where the employee is dismissed on the day he or she reaches the normal or agreed retirement age, or, whether it also includes a situation where the employer does not dismiss or retire the employee on the day he or she reaches the normal or agreed retirement age but allows the employee to continue working as normal after reaching such age and dismisses him or her at any time thereafter.

Zondo CJ’s judgment (first judgment)

The former Chief Justice took the view that, although, in both scenarios, it can be said that the employee is an employee who has reached the normal or agreed retirement age, for purposes of section 187(2)(b), the meaning that should be preferred is the one to the effect that a dismissal of an employee on the basis of age is fair only when the dismissal happens on the day the employee reaches the normal or agreed retirement age unless the agreement between the parties or the collective agreement provides that where an employee reaches his or her normal or agreed retirement age on a date other than the last day of the month, the employee’s last working day or retirement day will be the last day of the month. In such a case, a dismissal of an employee on the basis of age on the last day of the month would still be fair.

The former Chief Justice preferred this interpretation because the other interpretation which allows the employer to let an employee work as normal beyond the day on which he or she reached the normal or agreed retirement age and then unilaterally decide when, thereafter, to retire or dismiss the employee on the basis of age is open to abuse by employers. An example of such abuse is that if subsequently the employer suspects the employee to have committed misconduct, he or she can avoid a disciplinary process by simply dismissing the employee on the ground of age and not disclose that, in fact, it is dismissing the employee because he or she suspects him or her to have committed misconduct.

As the employees in both these cases were dismissed on the basis of age after the dates on which they had each reached their normal or agreed retirement ages, Zondo CJ held the dismissals to have constituted unfair discrimination and automatically unfair. In the Solidarity case the Conditions of Service contained a clause to the effect that if  employees worked beyond the date when they reached the normal retirement age with the consent of the SITA, they could retire not later than age 67. As the Solidarity case showed that the employees had continued to work with the consent of the SITA and were dismissed after the dates on which they reached their normal retirement age but before age 67, the dismissals were automatically unfair.

Van Zyl AJ’s judgment (second judgment)

The second judgment, written by Van Zyl AJ, agreed with the first judgment that the matters engaged this Court’s jurisdiction and that leave to appeal must be granted. The second judgment agreed with the first judgment that the decision in Waco and that of the Labour Appeal Court in Landman was incorrect to the extent that it held that the employer may terminate the employment relationship at any time after the employee has reached retirement age. The second judgment provided an analysis of why this proposition was incompatible with established contractual principles. However, the second judgment disagreed with the first judgment in three aspects: it critiqued its reasoning behind the above conclusion, it contested the employer's obligation to terminate employment upon reaching the agreed retirement age, and it asserted that, based on the facts of the cases presented, the appeals should have been dismissed.

The second judgment disagreed with the reasoning of the third judgment as being inconsistent with the nature of the right which flowed from the manner in which the Legislature had chosen to deal with the termination by an employer of the employment relationship upon the employee having reached the determined retirement age.

The second judgment in interpreting section 187(2)(b) found that the employer had an election to terminate the employee's employment on the basis of age when the employee reached their normal or agreed-upon retirement age. This election was regulated by standard contractual practices. The second judgment found that an employee's exercise of rights regarding dismissal must have occurred within a reasonable time after reaching retirement age. An employer may be deemed to have chosen not to terminate an employee's employment if the employer did not exercise the termination election within a reasonable timeframe.

The second judgment found that the interpretation of section 187(2)(b) conformed not only with contractual principles but to the principles which found application to the acquisition of a right to terminate a legal relationship in general, whether contractual or otherwise.

The second judgment found that in terms of section 187(2)(b), the continuation of the employment relationship was linked to the legislative view that termination due to reaching retirement age was regarded as a dismissal, which allowed the employer to retain the right to terminate the employment relationship.

The second judgment found that the interpretations of section 187(2)(b) in the first and third judgments were inconsistent with both the Legislature's classification of termination based on age as a dismissal and the employer's rights relating to an employee reaching retirement age, alongside applicable contractual principles that find application thereto. The second judgment found that the Labour Appeal Court in Landman correctly ruled that employers could not rely on section 187(2)(b) for dismissals if the true reason was unrelated to age. The key issue was whether the employers in the present matters chose not to terminate the employees' contracts upon their retirement.

The second judgment dismissed the decisions of both the Labour Appeal Court in Landman and the Labour Court in Solidarity, which dismissed the employees’ claims. It made no order as to costs.

Therefore, the second judgment found that in Landman, leave to appeal was granted and dismissed the appeal. In Solidarity, the second judgment found that leave to appeal was granted and dismissed the appeal.

Rogers J’s judgment (third judgment)

The third judgment, authored by Rogers J with Dodson AJ, Kollapen J and Tshiqi J concurring, agreed with the second judgment that the appeal in Landman should be dismissed, and agreed with the first judgment that the appeal in Solidarity should succeed. However, the third judgment disagreed with the first judgment awarding costs against SITA in Solidarity. The third judgment also fundamentally disagreed with the first and second judgments’ interpretation of section 187(2)(b) of the LRA. The third judgment found, in terms of the plain meaning of the provision, a dismissal is fair if it occurs on or any time after an employee has reached the agreed or normal retirement age, provided reasonable notice is given. The phrase “has reached” in the provision indicates a continuous state that does not expire after the exact agreed or normal retirement age date.

The third judgment found that this interpretation aligns with section 187(2)(b)’s purpose: ensuring an equitable distribution of employment opportunities by opening up jobs for younger workers. Another potential purpose is to allow employers to end the careers of older employees with dignity while they are still productive and thus avoid potentially unpleasant and humiliating incapacity hearings as the employees age further. These goals are not served by confining the date of dismissal to the exact retirement-age date (as proposed by the first judgment) or a reasonable time thereafter (as proposed by the second judgment). The goal of uniformity and fairness is also not served by the first judgment’s interpretation of section 187(2)(b). Fairness does not require dismissals to occur on the exact retirement-age date and retirement ages may differ between employees. Additionally, the first judgment’s interpretation undermines uniformity by effectively granting employers an election on whether to dismiss their employees on the relevant date or to lose this right.

Regarding the second judgment, the third judgment found that the principle of election is not applicable in terms of section 187(2)(b) because the principle applies where the event giving rise to the right to make the election is unexpected. An employee reaching their normal or agreed retirement age is foreseeable.

Additionally, the third judgment found that both the first and the second judgments’ interpretations of section 187(2)(b) of the LRA would result in more employees being dismissed on or soon after their retirement-age dates, depriving them of continued employment time. There may also be an increase in incapacity hearings for employees that are not dismissed in time.

On the merits of the specific cases: in relation to Landman, the third judgment found that Mr Landman had accepted his retirement age as 60 and procedural fairness was not at issue. Therefore, the third judgment agreed with the second judgment that the appeal should be dismissed with no order as to costs. In relation to Solidarity, the third judgment agreed with the first judgment that based on the particular facts of the case, the retirement age of 67 applied. The third judgment therefore agreed with the order proposed by the first judgment in Solidarity, barring the costs order made against SITA. The third judgment reasoned that SITA did not act maliciously and there was no reason to believe Solidarity would not cover the employees’ costs. Even if the employees bore the costs themselves, these would be shared between them and, as relatively high earners, they would not be left without any compensation.

The Court’s discussion of the effect of the three judgments

These two cases concern the interpretation of section 187(2)(b) of the Labour Relations Act1 (LRA). The delay in delivering judgment is in part attributable to the fact that the Court has been unable to reach agreement on the matter. The result is that there is no majority on the interpretation of the section. There are, however, majorities, for the orders to be made in the two cases.

On the interpretation of section 187(2)(b), four members of the Court (per Zondo CJ, with Chaskalson AJ, Mathopo J and Schippers AJ concurring) (first judgment) conclude that a dismissal on the basis of age is fair in terms of that section only if the employee’s employment is terminated on the date upon which the employee attains his or her normal or agreed retirement age. A termination on the basis of age at a later date is automatically unfair unless the agreement between the parties or applicable legislation provides that, where an employee reaches his or her retirement age during a month, his or her last working day or retirement date will be the last day of the month in which he or she reaches the normal or agreed retirement age. The first judgment holds that Waco2 and the cases that have followed it were wrongly decided.

A fifth member of the Court, Van Zyl AJ (second judgment), held that upon the employee reaching his or her normal or agreed retirement age, the employer has an election whether to terminate the employee’s employment on the basis of age. This election is governed by ordinary contractual principles. Such a termination, and notice thereof, may take place on a date later than the employee’s normal or agreed retirement age. An employer may, however, be found to have elected not to terminate the employee’s employment if the employer fails to exercise the termination election within a reasonable period of time. This depends, though, on whether the employer had knowledge of the correct legal position. The second judgment thus also disagrees with Waco, but for reasons differing from those contained in the first judgment.

The remaining four members of the Court (per Rogers J, with Dodson AJ, Kollapen J and Tshiqi J concurring) (third judgment) holds that once an employee has reached his or her normal or agreed retirement age, section 187(2)(b) permits the employer, then or at any time thereafter, to terminate the employee’s appointment on the basis of age, upon the giving of reasonable notice. The third judgment leaves open the question whether the employer is required to give the employee a hearing, since a decision on that point is unnecessary. It does, however, point to the desirability of affording such a hearing. The third judgment thus accords with the interpretation adopted in Waco, albeit for somewhat different reasons to those stated in that case.

As to the order to be made in the first case, CCT 298/2022 (Landman), there was unanimity that the case engages the Court’s jurisdiction and that leave to appeal should be granted. The first judgment would have upheld the appeal and awarded Mr Landman compensation equal to 24 months’ remuneration together with costs in the Labour Court, the Labour Appeal Court and this Court. The second and third judgments conclude, however and albeit for differing reasons, that the appeal should be dismissed with no order as to costs. The latter disposition of the case thus commands a majority.

As to the order to be made in the second case, CCT 346/2024 (Solidarity), there is again unanimity that the case engages the Court’s jurisdiction and that leave to appeal should be granted. The first judgment concludes – both as a matter of law based on its interpretation of section 187(2)(b) and in any event on the particular facts of the case – that the appeal should succeed, that the six employees in question should be awarded compensation equal to 24 months’ remuneration and that the applicants should be granted costs in the Labour Court, the Labour Appeal Court and this Court. The second judgment would have dismissed the appeal with no order as to costs. Based on the particular facts of the case, the third judgment agrees with the disposition proposed in the first judgment, save that the third judgment would not grant the applicants costs in any of the Courts concerned. There is thus a majority in favour of upholding the appeal and awarding the employees compensation equal to 24 months’ remuneration, but no majority in favour of awarding the applicants costs in any of the Courts concerned.

The order of the Court

Although none of the three judgments enjoyed majority support in regard to its interpretation of section 187(2)(b), there was majority support for Zondo CJ’s second ground on which he concluded that the Solidarity members’ dismissals were automatically unfair. Zondo CJ would have ordered that the employer in each case should pay the employees compensation equal to the employee’s 24 months’ remuneration with costs in all the courts, including the costs of two Counsel. The Court upheld Solidarity’s appeal brought against the SITA and ordered that Solidarity’s members involved in this case be paid an amount equal to 24 months’ remuneration of the employee concerned. In the case of one of the employees who passed away a few years ago, Ms Sonia du Plessis, the Court ordered that the SITA pay an amount equal to 24 months’ remuneration to the executrix of the estate in her representative capacity. No costs were ordered.

The Full judgment  here