What happens if your company transfers   a group of companies that have different retirement ages in place? Can you choose your preferred date or does your original employment contract remain?

In a judgment delivered on 7 February 2025, in Elmarie Steyn (the plaintiff) v Business Connexion Group Limited (BCX) under case number J1500/20, the Labour Court considered whether the plaintiff’s dismissal was fair under section 187(2)(b) of the Labour Relations Act 66 of 1995 (LRA), which allows for fair dismissal if an employee has reached the agreed retirement age.

Facts and court findings

The plaintiff was employed as a Programme Manager at UCS Solutions (Pty) Ltd (UCS) and her employment contract stipulated that she would retire at age 60. On 1 April 2018, UCS was transferred to BCX, in a sale of business agreement in terms of section 197 of the LRA. Two other companies were also simultaneously transferred to BCX. The two subsidiary companies had a retirement age of 65 while, importantly, BCX had a retirement age of 60 at the time of transfer.

BCX informed the employees that it intended to harmonise all its employees’ employment contracts so that everyone enjoyed the same or similar terms and conditions of employment and benefits. BCX did not set a time period regarding the commencement and/or finalisation of this harmonisation process.

Subsequently, BCX presented the plaintiff with a new contract of employment, which she refused to sign. The plaintiff contended that she did not sign the employment contract as a result of the unduly onerous restraint of trade clause and the retirement age therein. The plaintiff also argued that the different retirement ages of BCX, at the time of her dismissal, were discriminatory as she wanted to extend her retirement date to the age of 65 as per the subsidiary companies’ retirement age.

On 6 June 2020 the plaintiff turned 60 years old and her employment subsequently terminated with her last day of work being 4 September 2020. The plaintiff referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) for conciliation. When the conciliation did not yield the desired results, the plaintiff referred the dispute to the Labour Court for adjudication, claiming that she had not reached the retirement age and therefore the decision to retire or dismiss her, is automatically unfair in terms of section 187(1)(f) of the LRA. BCX invoked section 187(2) of the LRA and contended that the plaintiff’s dismissal is fair as she had reached the agreed retirement age for persons employed in that capacity.

Judgment analysis

The Labour Court rejected the plaintiff’s argument that her dismissal was automatically unfair under section 187(1)(f) of the LRA because it constituted age-based discrimination and emphasised the legal principles governing section 197 transfers. The court reaffirmed that when a business is transferred as a going concern, all of the existing employment terms, including the employee’s retirement age, are automatically transferred to the new employer. In the matter at hand, the plaintiff’s agreed retirement age at UCS was 60 and that condition continued to apply after her transfer to BCX.

Additionally, the court highlighted that differentiation in employment conditions among transferred employees and pre-existing employees does not automatically constitute unfair discrimination. It ruled that the plaintiff misconstrued section 197(3)(a), which required that transferred employees’ terms be “on the whole not less favorable”, rather than identical to those of the new employer’s existing workforce.

The court further noted that any alleged unfair treatment regarding retirement policies should have been pursued as a grievance or an unfair labour practice claim, instead of a discrimination claim under section 187(1)(f). Ultimately, the plaintiff’s retirement age of 60 years was validly transferred from UCS to BCX under section 197 of the LRA. Therefore, BCX was entitled to terminate the plaintiff’s employment upon her reaching the agreed retirement age under section 187(2)(b) of the LRA. The plaintiff’s claim was thus dismissed with costs.

Written by Chardonnay Arends, Fluxmans Attorneys