Aging Employees: When Must They Retire?

September 2018 | Uncategorized

“Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples” (Comedian George Burns)

Record numbers of Baby Boomers are now reaching their 60s, and if you are an employer in any size of business (from the smallest family-owned enterprise to the largest corporate), make sure now that you have a policy in place to handle the thorny question of compulsory retirement.

This is vital – sooner or later you are going to have an employee turning 55 or 60 or 65, and if you think you can just say “Happy Birthday Kim, time for you to retire, see you around” you are in for big trouble.

So what’s the legally required retirement age?

The problem is that nothing in our law imposes a standard retirement age on employees. So trying to force someone to retire at an age that you unilaterally choose (no matter how much you may think that 65 is the universally-accepted gold standard for being put out to pasture) opens you up to a claim for ‘age discrimination’. And that would amount to an automatically unfair dismissal, for which our courts will make you pay dearly.

What our law does say is 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” (our emphasis).

Let’s look at each of those options –

• “Agreed”: Clearly your best course of action is to have a written agreement with every employee specifying a compulsory retirement date. Ideally have such a clause in every new employment contract, and if any existing contracts have no such clause, negotiate one now (it’s essential to do this bilaterally not unilaterally – see case below).
• “Normal”: You can always try to convince a court that you have, through past practice in your business, established a “normal” retirement age. You will have to prove that you have consistently applied this age in previous retirement situations and that the employee in question was aware of it. Far safer of course is to have in place a formal “retirement policy”.

Whatever you do, don’t act unilaterally

A recent Labour Court case shows how dangerous it can be to try to alter any term of employment without negotiating and agreeing it with your employees –

• An employee’s employment contract made no direct mention of a compulsory or automatic retirement age, but his employer’s ‘Human Resources Policy and Procedure Manual’, which was incorporated into and formed part of his contract, stipulated a retirement age of 65.
• This was reduced to 60 when the Manual was replaced by a “Terms and Conditions of Employment” policy. The new policy excluded employees “expressly entitled to retire at 65 in terms of their individual contracts of employment”.
• The employee’s services were terminated when he turned 60 and he approached the Labour Court for assistance.
• The Court held that the employer is “not permitted to unilaterally amend terms and conditions contractually agreed to” and was therefore in breach of contract. The employer must now reinstate the employee retrospectively to the date of termination, his compulsory retirement age being confirmed at 65.

What to do when retirement age is reached

Preferably your employment contracts should specify an agreed procedure to be followed on retirement date, but in any event don’t let the date just float past. Rather, if you agree on an extension period, have your lawyer draw up an amended employment contract to avoid any uncertainty or dispute.

Employees – know your rights

Age discrimination is just one form of automatically unfair discrimination prohibited by law. Stand up for your rights if you think you are being discriminated against, directly or indirectly, “on any arbitrary ground, including, but not limited to race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility.”

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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The Importance of Directors’ Meeting Minutes – “Who, What, Where, When and Why?”

September 2018 | Uncategorized

“A company must keep minutes of the meetings of the board, and any of its committees…” (Extract from the Companies Act)

Steinhoff and other high profile corporate scandals both here and overseas highlight the need for directors to ensure that their board and committee meetings (and the decisions taken at them) are correctly and accurately recorded.

The point is that as a company director you are given wide powers by our Companies Act, but you also have to comply with a raft of fiduciary duties and statutory responsibilities. Failure to do so exposes both your company and you personally to substantial risk.

A vitally important aspect of managing this risk is ensuring that proper minutes of your meetings are kept.

Good minute keeping – Who? What? Where? When? Why?

Here’s an idea worth following. U.S. law firm Patterson Belknap Webb & Tyler’s article “A Minute Guide to Minutes” (available here) suggests that you always cover the “5Ws”. In a local context these cover –

• Who? The names of all attendees, their capacities and, if anyone was present for only part of the meeting, which part. Record also any apologies or non-attendances. Remember that you may need to prove later that there was a quorum.
• What? What happened in the meeting in relation to the agenda, the subjects discussed, decisions made and actions taken (resolutions passed must by law be numbered sequentially and dated), summaries of any presentations made by outsiders (such as staff or outside advisers like your lawyers), any important regulatory issues like declarations of conflict of interest (this latter is again a legal requirement), and so on.Bear in mind the fundamental duty of directors to act in the company’s best interests, to understand the issues facing the company, and to formulate their own, independent views so they can actively contribute at board meetings. The minutes should reflect this. In addition, all directors should be sent a comprehensive pack at least 7 days before the meeting to give them time to prepare, and on an individual basis they should keep their own notes during the meeting and retain them as proof of having applied an independent mind to the issues.

  Have your lawyers review the minutes in relation to any contentious issues discussed, particularly where there is any possibility of litigation or investigation by statutory bodies like SARS or the Competition Board.

  Generally, strike a balance between too much detail and too little here – ensure that the minutes reflect everything of importance and give an accurate sense of the meeting without drowning in unnecessary detail.

• Where? Ensure that the minutes (and any relevant documents referenced in them) are kept securely by the company secretary or a director for at the very least the statutory minimum of seven years.
• When? It’s important that the minutes be written and approved shortly after meetings, and circulated to all directors whilst the meeting is still fresh in their minds.
• Why? Directors’ meetings are fundamental to the good management of your company and to the decisions that you as a board make on its strategic direction. How these meetings are minuted could prove critical if for instance disputes or litigation or regulatory issues arise in the future.

In a nutshell, since minutes are, once signed by the chair, “evidence of the proceedings of that meeting” and of resolutions adopted, they provide the most important historical record of how and why decisions were taken. Prioritise this vital and legally-required recording process accordingly.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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What To Do When Someone Dies

September 2018 | Uncategorized

The inevitability of death doesn’t detract from the shock and distress that it brings to the grieving survivors, and much as we don’t like to plan for these things it will help at least a little to know what to do in practice after a death.

The formalities

There is unfortunately a lot of red tape involved, but your family doctor, undertaker and spiritual advisor (if you have one) will help you with or attend to many of the formalities and practicalities –

Firstly, you will need a Notice of Death which sets out the identity of the deceased as well as the date, time and cause of death. If the deceased died at home, call in your family doctor for help. The deceased will be transported to a mortuary or funeral home and an autopsy may be necessary if your doctor is unable to certify the cause of death as “natural causes” (generally speaking the doctor will need to have seen the deceased no more than 6 months prior to death to be satisfied in this regard). In cases of death from “unnatural causes” (accidents or suspicion of foul play for example) you need to call in the police who will organise an autopsy at a State Mortuary.

A Death Report will then be issued, together with a Burial Order. These are issued by persons authorised to do so by Home Affairs (the list includes traditional leaders, police officers and authorised undertakers). Note that cremation requires confirmation from a second doctor.

In due course the Department of Home Affairs will issue a Death Certificate after receipt of the Notice of Death and the Death Report. That can take a few weeks but you can get an abridged death certificate free of charge immediately. The executor of the deceased’s estate will need the Death Certificate to begin the process of winding up the estate and you or the executor will need certified copies for claims on life policies etc.

The death must also be reported within 14 days to the Master of the High Court (see below).

Practical issues

• Make a list of family members and close friends who you need to contact about the death, and don’t be afraid to ask for help and support, this is a time when everyone will want to be there for you.
• If the deceased lived alone prioritise things like pets and livestock, home security and safety, security of firearms, electricity top-ups, perishables in fridges and so on.
• If the deceased was an organ donor, let the applicable organisation know as soon as possible – time is naturally of the essence.
• Find and secure the deceased’s ID document, passport/s, important papers like title deeds etc as soon as possible.
• Find the deceased’s will (hopefully he/she will have left one) and contact the nominated executor who will give you a list of things you need to do and paperwork you need to get together. If you are nominated as executor, contact your attorney to help you with the winding-up process.
• If there was no will, again contact your attorney for help in reporting the death to the Master of the High Court. You will need to lodge an inventory of assets with the Master, who will normally appoint a formal executor only where the value of the estate exceeds R250,000.
• Find out if the deceased had funeral insurance and if so what is required to claim on it. There is no legal requirement for a funeral or memorial service to be held but generally be guided by the deceased’s wishes if you know or can find out what they were. Also naturally follow any religious beliefs and requirements. A funeral home will help with all the funeral arrangements.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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