Schmahmann v Concept Communications Natal (Pty) Ltd  8 BLLR 1092 (LC)
Division: Labour Court, Durban
Date: 30 / 08 / 1997
Case No: D 18 / 97
Before: Landman, Acting Judge
Application in terms of section 191(5)(b)
Dismissal Automatically unfair Dismissal of employee upon reaching normal retirement age not unfair.
Dismissal Meaning of Retirement Retirement of employee at normal retirement age not amounting to dismissal.
Dismissal Operational reasons Employer not required to comply with retrenchment provisions of Act when placing employee on retirement at normal retiring age.
Labour Court Practice and procedure Absolution from instance Labour Court has power to grant absolution where onus rests on applicant Court granting absolution where employee failed to discharge onus of proving that she was dismissed.
Retrenchment Employer not required to comply with retrenchment provisions of Act when placing employee on retirement at normal retiring age.
Retirement Retirement of employee at normal retirement age not amounting to dismissal.
Sections of the Act considered
Section 151(2) Section 186 Section 187 Section 192
The applicant, a bookkeeper/office manageress, was employed by the respondent for 15 years before her contract was terminated when she reached the age of 65 years. The reason for the termination was that the respondent had converted from a manual to a computerised accounting system. The parties had not agreed on a mandatory retirement age. The applicant claimed she had been retrenched and was entitled to severance benefits. After the applicant had led her evidence, including that of an expert witness, the respondent applied for absolution from the instance, which the Court granted on the basis that the applicant had not discharged the onus of proving that she had been dismissed.
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The Court pointed out that the various forms of dismissal specified in the Act each contained an active verb governing the word “employer”. It was in each case therefore the employer which caused the employee’s dismissal, and this did not happen where the parties had agreed that the contract would terminate on a particular date. A dismissal was automatically unfair if the employee had been unfairly discriminated against on an arbitrary ground. The Act specified, however, that a dismissal was not deemed automatically unfair if the employee had reached the agreed or normal retirement age. The Court held, however, that an employee was not dismissed if retired by the employer on attaining the agreed or normal retirement age. The applicant had on her own evidence shown that she had reached the normal retirement age, and any obligation to pay a “golden handshake” was merely moral. The application was accordingly dismissed.
Rosa Schmahmann was born on the 7 January 1932. She was employed by Concept Communications Natal (Pty) Ltd as a bookkeeper/office manageress for 15 years and ceased working for them on the 6 December 1996. At the date of the termination of her services she was earning R3 300 per month. She also received each year a Christmas bonus. The quantum of the Christmas bonus was in the discretion of her employer.
The applicant would have attained the age of 65 on the 7 January 1997. During August and September the applicant had meetings with inter alia Philip Greenberg, a director of the employer company. As a result of these meetings the applicant received a letter dated the 26 September 1996. The letter reads as follows:
Your two meetings with the directors regarding the above refers:
As explained, we intend converting Concept Communications to a close corporation before our current year end and, simultaneously, computerising our current manual bookkeeping function.
Given that these two steps amount to a radical overhaul of our business in line with our overall business strategy, and taking into account that you will be turning 65 in January, we believe that it would be in the company’s best interests for your to officially retire at the end of 1996.
We have arranged for Ms Cheryl Gouws of CMG Bookkeeping Services to meet with you at Concept at 09h00 on Tuesday, October 1 as the first step towards handing over responsibility of the bookkeeping function. We anticipate that this process will take some time to complete and would therefore ask you to give Cheryl your full cooperation in order to make this changeover as smooth as possible.
Thereafter, we would want the manual and computerised accounting functions to run concurrently for a trial period so as to avoid any disruption to Concept’s Accounts Department. Once we are satisfied with the computerised accounting system, you will be free to leave albeit perhaps earlier than the end of December. We will pay you through to the end of December after first having taken any leave entitlement into account as at that date.
It goes without saying that after 15 years’ loyal service to this consultancy, we would want to acknowledge your contribution to Concept and in this regard, we shall revert to you closer to the time of your departure.”
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This letter was placed in the applicant’s intray some time after the 26 September. The applicant says that she thinks it was placed there whilst she was on compassionate leave as a result of her mother’s death. The applicant continued to work for her employer until the 6 December 1996 when, according to her version, she was told by her employer that her services were not required. When she visited the employer’s offices on about the 13 December 1996, she was handed an envelope containing the following communication from CMG Bookkeeping, Admin and Tax Services, which was addressed to Mr Greenberg. It reads:
“Re: R Schmahmann
|Transfer to be done in the sum of
|Figures as follows:
|1 month salary in lieu of leave pay
|R 3 300,00
|1 month salary to pay to end December ’96
|R 3 300,00
|R 5 000,00
|Less : UIF
A computerised pay slip will be dropped at your offices at approximately 13h30 tomorrow to be handed/posted to Rosa.”
It is common cause that she received the amount of R11 082,30. She was therefore remunerated until the end of the month in which she turned 65. The applicant did not receive a Christmas bonus in December of 1996. She says that based on previous experience she expected a bonus of between R2 000 and R2 500.
The applicant says that she used a wordprocessor in order to type letters and accounts and she printed the results on a laser printer. She does not know what the wordprocessing package was, but she was able to do what was required on the computer. She says and it was common cause that her employer did not have an agreed retirement date. She says that she herself did not have a retirement date in mind at any stage and that she intended continuing working while she was in good health and while she was capable of doing her job as a bookkeeper/office manager.
She says that she was upset about being retired by her employer; Mr Philip Greenberg in retiring her made her feel old. She contacted what she described as the Department of Manpower (the Department of Labour), explained the situation to them, and she was telephonically informed that she was entitled to severance pay of at least one week per year of service. In the light of this she felt that she should have been given a bigger golden handshake, and that she should have received her December bonus. She is presently unemployed, but she has not been seeking work because she has been overseas. She has claimed unemployment insurance benefits. She believes that she was retrenched, although she admits that her employer did not use these words. She believes that she was retrenched because when the discussions began in August of 1996, her employer indicated to her that they were considering computerising their accounting operations and she says that she was even prepared to be paid less once that had taken place. She says that she was not offered an opportunity to
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familiarise herself with computer accounting and indeed this function was outsourced to CMG Bookkeeping, Admin and Tax Services. She believes that she would have been able to come to grips with computer accounting had she been given a chance. She did not protest to her employer about her impending retirement, as she says her employer informed her that the mandatory age for retirement was 60 for females and 65 for males. It was only after she had the discussion with the Department of Manpower that she felt dissatisfied. The applicant was asked to state what she understood by the concept of the normal retirement age, but she was unable to state what age she regarded as normal. As far as she was concerned she would continue working until she did not feel capable of
Miss Sonya Hill gave expert evidence. Miss Hill holds the degrees BComm (Personnel Management) 1986; BComm (Honours) (Industrial Psychology) 1990; MComm (Industrial Psychology) 1995; and is currently engaged with reading for a DComm in Industrial Psychology. She has been working in the industrial/human resources field for the past nine years. She is registered with the South African Medical & Dental Council as a psychologist in the category “Industrial”, and she is a member of the Psychological Society of South Africa and a member of the Institute of Personnel Management.
In her evidence Miss Hill said that she did not think that 65 was a mandatory or a normal retirement age for females doing the work which the applicant did, namely bookkeeping and office management. She was of the opinion that the retirement age should be fixed by agreement between the parties. She referred to statistics which have been released by Sanlam, an insurance company, indicating that male employees usually retire at 63,9 years and female employees retire at 63,3 years. She says that it was in fact the practice for females to retire between 58 and 63, and for male employees to retire from 63 upwards. She stated that it was, in her opinion, unfair to discriminate between men and women as regards their retirement age and that there were no biological, cultural or other reasons to require such differentiation. Under crossexamination she was asked how old the applicant should be when she should retire. She replied that there was no reason for the applicant to go on retirement, and that she did not believe that there was such a concept as a normal retirement age for this class of employees. As long as the employee was capable of doing the job there was no reason to be retired.
Absolution from the instance
In the Industrial Court of South Africa it was held that it was incompetent for that court to grant absolution from the instance after an applicant had led his or her evidence. The Industrial Court was, however, not a court of law, but an administrative organ. The question which arises in this matter is whether the Labour Court has the power to grant absolution from the instance after an applicant has led evidence. The Labour Court of South Africa is a court of law and a superior court that has authority, inherent powers and standing, in relation to matters under its jurisdiction, equal to that which our High Court has in
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relation to the matters under its jurisdiction. See section 151(2) of the Labour Relations Act 66 of 1995 (the LRA).
Harms Civil Procedure in the Supreme Court, paragraph O2 states:
“At the close of the plaintiff’s case the defendant may, without leading evidence, apply for an order of absolution from the instance. On such an application the procedure is that the defendant addresses the court, the plaintiff answers and the defendant has the right to reply.
The test to be applied by the court at this stage of the trial is : Is there evidence upon which a reasonable man might find for the plaintiff? Another approach is to enquire whether the plaintiff has made out a prima facie case. The application is akin to and stands on very much the same footing as an application for the discharge of an accused at the end of the state case in a criminal trial.
The court has the discretion to grant or refuse absolution from the instance. In the exercise of its discretion it will not normally have regard to the credibility of witness unless the plaintiff’s witnesses are so obviously lying, or have so palpably broken down that no reasonable man can place reliance upon them. The court may also have regard to the possibility that the plaintiff’s case may be strengthened by evidence emerging in the defendant’s case. Where plaintiff’s case depends upon the interpretation of a document, the court ought to refuse absolution unless the proper interpretation appears beyond doubt . . . Absolution from the instance can only be granted if the onus rests upon the plaintiff. If the onus rests on the defendant there can be no order for absolution from the instance, either at this stage or later.”
In terms of section 192 of the LRA in any proceedings concerning any dismissal the employer must establish the existence of the dismissal. If the existence of the dismissal is established, the employer must prove that the dismissal is fair.
In this instance therefore an onus rested upon the applicant to show that she had been dismissed. This raises the question what is meant by dismissal? The protection against unfair dismissal is premised on the concept of a dismissal. The LRA seeks to define a dismissal in section 186. This section reads:
“‘Dismissal’ means that
- an employer has terminated a contract of employment with or without notice;
- an employee reasonably expected the employer to renew a fixed term contract of employment on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it;
- an employer refused to allow an employee to resume work after she
- took maternity leave in terms of any law, collective agreement or her contract of employment; or
- was absent from work for up to four weeks before the expected date, and up to eight weeks after the actual date, of the birth of her child;
- an employer who dismissed a number of employees for the same or similar reasons has offered to reemploy one or more of them but has refused to reemploy another; or
- an employee terminated a contract of employment with or without notice because the employer made continued employment intolerable for the employee.
In each paragraph there is an active verb governing the employer. The employer in each instance effects or causes
the termination of the employee’s services. A dismissal is not something which an employee initiates. A dismissal is not the effect of an agreement reached at the stage of the termination of services or, save for the circumstances outlined in paragraph (b) in advance. Nor is it something which merely happens. When an employer and employee agree
specifically or by implication (retirement on normal retirement age) in advance that the effluxtion of time is to operate as the guillotine which severs their employment relationship then it cannot be said that when this date arrives that there has been a dismissal by the employer although the relationship and the contractual obligations are terminated. Barker and Holtzhauzen South African Labour Glossary Juta 1996 define dismissal as: “The termination of the employment of an employee by an employer . . .” The LRA does not depart from this common conception of a dismissal.
It is however true that in terms of section 187(1) of the LRA, a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against an employee, directly or indirectly in the arbitrary grounding (see section 187(1)(f)). Arbitrary grounds are not defined but in paragraph (f) it is said that arbitrary grounds include, but are not limited to race, gender, sex, ethnic or social origin, colour, sexual orientation, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibilities.
There are two exceptions to an alleged unfair discrimination and consequently a dismissal on arbitrary grounds. The possibly relevant exception is section 187(2)(b), which states that despite subsection (1)(f), a dismissal based on age is fair if the employer has reached the normal or agreed retirement age for persons employed in that capacity. I do not think that this means anything more than that if there is a dismissal on the arbitrary grounds it will not be unfair if it coincides with the time that the employee reaches the agreed (express or implied) or normal retirement age.
In my opinion an employee is not dismissed if that person is retired by her employer on attaining the agreed or normal age of retirement. See Badenhorst v GC Baars (Pty) Ltd (1995) 10 BLLR 19 IC at 26 where Kachelhoffer AM says:
“Normally, the applicant’s employment contract would have terminated by effluxtion of time on reaching 65 years of age (31 December 1993 in terms of the rules of the pension fund), unless the respondent decided to consent to retiring at a later date.”
And at 25C:
“Where consultation is normally not necessary when the retirement age was reached, it may well be necessary to determine the personal circumstances of an employee who requested to extend her services beyond the age of retirement, before a fair decision not to extend the employment can be taken.”
In my opinion this decision correctly states the law that when one reaches a retirement age the employment relationship terminates. In my opinion this is so whether it is an agreed age or the normal retirement age. The services are terminated and this termination does not constitute a dismissal. However, if, and I doubt this to be the case as we are not dealing with an unfair labour practice as defined in the Labour Relations Act 28 of 1956, there must be consultation, then in this case there was consultation. The applicant did not indicate at that stage to her employer that she did not wish to retire although she told the court that she would have continued to work for a lesser salary. It was only after she had retired and made contact with the Department of Labour that she felt aggrieved.
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The fairness of the dismissal
Strictly speaking, it is unnecessary to make any observations on this account for there has not been a dismissal. Had there been a dismissal the onus of proving fairness of it would have been on the employer and absolution from the instance would not have been competent.
However, it may be observed that on the applicant’s own evidence she has shown, by virtue of her expert, that employees who perform work in various capacities, including that performed by the applicant, normally or generally retire in the case of female employees between 58 and 63, and male employees between 63 and 65. Leaving aside the difference in retirement ages between men and women one may assume that, at the very least, the retirement age for employees doing work such as the applicant, is 65 years of age.
The result is that this is the normal retirement age. The applicant reached the normal retirement age. Her employer was entitled to say to her that when she reached this age she had retired and that her services were at an end. Equally her employer was entitled to arrange for the transition to a computerised system or to outsource the bookkeeping function to coincide with her retirement.
If there was any moral obligation to pay any golden handshake, that is irrelevant for the purposes of this case, save to note that the applicant’s employer paid her a golden handshake amounting to R5 000. If it did not include her bonus, as I assume it did not, then that should have been claimed, either before this Court or before another forum. It was not claimed in this Court.
In the circumstances for the reasons set out relating to the failure of the applicant to prove that she had been dismissed, absolution from the instance was granted.
Taking into account the address of the respondent in regard to costs, each party was ordered to pay their own
In my opinion this satisfies one’s sense of justice. The applicant, who came across as a charming, elegant, well spoken person felt that she had been hard done by after taking advice. She has proved to be wrong, but I do not believe that she was vexatious or unreasonable, merely that, like so many others, she found the thought of being retired unpalatable although she did not mention it to her employer and she was hoping for compensation for this.
Miss LM Knobel of Berkowitz Kerkel Cohen Wartsky Greenberg
Mr C Head of Head’s Attorneys
Cases referred to
Badenhorst v GC Baars (Pty) Ltd (1995) 10 BLLR 19 IC 1097