Pensionable age and retirement date are different

MANY employers and employees confuse pensionable age for retirement date yet one can reach pensionable age and still continue working if in terms of internal policy, the two do not coincide. Pensionable age is guided by the appropriate pension fund rules. For example, NSSA has 60 years as pensionable age but many organisations have retirement age at 65 years. It is important for employers to put in place a retirement policy, which clearly stipulates the retirement age given the fact that our labour laws are silent on retirement age.

Where an employee has reached a pensionable age, it should not be assumed that it is also the retirement age. The organisation’s policy should clearly spell out when its employees are to retire. This is more so given the fact that there is a clumsy relationship between the Pension’s Act and the Labour Act Chapter 28:01 especially when it comes to the use of the word “retirement”.

John works in the Mining Industry where the retirement age is clearly spelt out to be 60 years and three months before reaching 60 years the employer gives him notice of retirement, at the same time he is advised that in terms of pension rules, his last contribution is when he attains 60 years. He is, therefore, retired when he turns 60 years and receives his pension from the Mining Industry Pension Fund and also receives another pension from NSSA.

Such a case is perfect and no claim can be made against an employer in relation to continued employment. However, if the employer still wants to employ John, he can engage him on a Fixed Term Contract basis and at the expiry of the Fixed Term Contract be re-engaged on terms agreed by the party.

Problems arise in cases where all of a sudden the employer gives notice of retirement to an employee who is turning 60 years or 65 years without prior warning. Such an approach is likely to cause conflict as workers will argue that they had an expectation of continuing to work because the Labour Act is silent on when they should retire and the statutory pension from NSSA does not say once one reaches the age of 60, he should stop working. But it only says, he should stop contributions to NSSA and get his pension but his retirement date is as per conditions of service set by the employer.

Another problem arises when one re-engages employees who have retired on a contract without limit of time. In such cases, the law is silent on the conditions of service which are applicable, however, at common law the parties would have to mutually agree on the terms. It cannot be assumed that the terms that related to the contract before retirement are applicable.

There is also another problem in that on termination of employment of such employees, does the employer have to retire them for the second time or has to retrench them. In my view an employee who has been retired should not be re-engaged on a contract without limit on time as that creates legal complications. However, if it has happened, the employer will need to ensure that the terms of engagement beyond the first retirement are clear.

The new thinking, however, is that in some professions there is more value from employees who are more than 65 years and as such many have been engaged on Fixed Term Contract to the age 70 and beyond. In conclusion, management of pensionable age and retirement should be guided by sound policies and procedures to avoid conflict with workers when they retire, are forced to retire, or are engaged beyond retirement date.

Davies Ndumiso Sibanda can be contacted on: Email: stratwaysmail@yahoo.com.