Under South African law, an employee must not be unfairly discriminated against. Age discrimination may constitute a ground for unfair discrimination. There are a number of cases which have come before the Labour Court where employers have been found to have unfairly discriminated on the basis of age.
A successful claim of age discrimination gives rise to an action for compensation of up to 24 months' remuneration under the Labour Relations Act (LRA) and may also give rise to a claim for damages under the Employment Equity Act. Not to mention the reputational risk to the business.
There is no legally prescribed retirement age. In the absence of a mandatory retirement age the parties may agree to the retirement age. This would avoid a claim of age discrimination. Where not agreed at the start of employment there are mechanisms to agree to a retirement age during the course of employment. An employer cannot unilaterally impose a retirement age if there is no agreement.
In the absence of an agreement, an employer exposes itself to the risk of a claim of unfair age discrimination. The LRA creates a defence to a claim of age discrimination by providing that a dismissal based on age is fair if the employee has reached the "normal or agreed" retirement age.
Where there is no agreed retirement age an employer has to prove a "normal" retirement age which is not always an easy task.
So, employers are best advised to agree on a retirement age and to apply the retirement policy consistently to the same category of employees.