When a Fixed‑Term Contract Meets Retirement Age: Lessons from a 2025 CCMA Award
Introduction
South Africa’s labour law allows employers to set a normal or agreed retirement age. Once an employee reaches that age, termination based on age is not considered automatically unfair under section 187(2)(b) of the Labour Relations Act (LRA). However, disputes often arise when employers offer fixed‑term contracts to employees who are already past their retirement age. What happens when that fixed‑term contract is not signed? Does the employee’s continued service create a new employment relationship, or does retirement still take effect?
These questions were at the heart of a 2025 CCMA arbitration of Wacker v Separation Scientific SA Pty Ltd (case number GAJB10175‑25) involving a long‑serving employee and his employer. The arbitration award was issued on 9 September 2025. This article examines the facts, the commissioner’s reasoning and the lessons for employers and employees from the perspective of the employer’s counsel.
Background of the case
The employee had been a managing director at his company for over three decades and earned a substantial monthly salary. When he reached the company’s retirement age of 65, he believed—based on informal discussions—that he could work until 70. The company informed him that he had reached retirement age and offered a one‑year fixed‑term contract starting 1 May 2024. He read the contract but refused to sign it because he expected to continue working. Nevertheless, he continued working and collected his pension benefits, which indicated that he had retired.
When the company gave the employee a one‑month notice in March 2025 that the fixed‑term contract would end on 30 April 2025 and that it would not be renewed, he claimed he had been dismissed. He argued that he had never agreed to retire at 65 and thus the termination was unfair.
The contested retirement age and unsigned contract
In his evidence, the employee maintained that the board of directors had verbally agreed that directors could retire at 70. He cited another director who had remained in employment until 73. He did not, however, produce any written proof of this agreement. In cross‑examination he conceded that any agreement altering the retirement age should be in writing and could not recall whether such an agreement existed. The employer’s policy documents, employee handbook and his own contract all stipulated a retirement age of 65.
The fixed‑term contract offered after he reached 65 was intended to allow him to work for one additional year. Although the employee refused to sign the contract, he continued working under its terms, drew his pension and was paid accordingly. The commissioner observed that by continuing to work, the employee accepted the terms of the fixed‑term contract, even without a signature.
The employer’s position
The employer contended that the employee had reached the company’s retirement age of 65 and therefore retired on 30 April 2024. To accommodate him, they offered a 12‑month fixed‑term contract from 1 May 2024 to 30 April 2025. They argued that once he retired, he could only remain in the business under a new contract, and the fixed‑term contract created this temporary relationship.
The employer pointed out that the employee was explicitly reminded in March 2025 that the fixed‑term contract would expire on 30 April 2025 and would not be renewed. Since his employment ended by the effluxion of time in accordance with the contract, the company argued that there was no dismissal. The onus therefore rested on the employee, under section 192 (1) of the LRA, to prove that a dismissal had occurred.
Key legal principles
The case highlights several important principles:
Retirement age must be clear and documented. An employer may set a normal or agreed retirement age, but any deviation must be formally recorded. The commissioner found it significant that all policy documents cited 65 as the retirement age and there was no written agreement permitting directors to retire at 70.
Acceptance of a fixed‑term contract can occur through conduct. Even if an employee refuses to sign a fixed‑term contract, continuing to work under its terms may constitute tacit acceptance. Failure to sign does not automatically invalidate the contract.
Retirement is not a dismissal. Section 187(2)(b) of the LRA provides that termination based on age is fair if the employee has reached the normal or agreed retirement age. Once a worker retires, any further employment is a new contract; termination at the end of a fixed term is not a dismissal.
Employees must prove dismissal. Section 192 (1) places the burden of proving a dismissal on the employee. In this case, the commissioner held that the applicant did not discharge this burden.
Closing arguments and legal debate
During the arbitration, both parties delivered detailed closing arguments.
Employee’s counsel: The employee’s representative argued that the original employment contract referred to a retirement age of 65 but allowed board ratification of a later retirement age; the employee claimed that the directors agreed informally that he could continue working until 70. They contended that the company’s 2024 policy change requiring retirement at 65 was implemented unilaterally and without consultation. The employee’s counsel further argued that the unsigned fixed‑term contract lacked essential terms such as remuneration and job functions and therefore could not constitute a valid tacit agreement. Relying on case law, they suggested that an agreed extension of the retirement age would make termination after 65 automatically unfair and emphasised that continued employment beyond retirement did not necessarily create a new fixed‑term contract.
Employer’s counsel: The employer’s representative countered that the non‑variation clause in the employment contract required any amendment to be reduced to writing and signed, and the Companies Act mandates a written board resolution for such variations. There was no evidence of board minutes or written consent; thus the alleged oral agreement was unenforceable. They argued that the policy consistently set the retirement age at 65 and there was no evidence of a later policy lowering the age. In their view, a tacit contract existed because the employee continued working, changed his title in emails, asked for annexures to the contract and accepted payment; such conduct, according to case law, binds the party as if he had agreed. The employer’s counsel emphasised that the employee never objected in writing to the retirement notice or the non‑renewal of the fixed‑term contract and only raised the dismissal claim at arbitration eight months after the contract lapsed.
These submissions framed the legal debate for the commissioner: whether the employment contract continued beyond 65 (as the employee’s counsel argued) or ended at retirement with a separate fixed‑term arrangement (as the employer’s counsel contended). The commissioner ultimately preferred the employer’s version, noting the absence of written variation and the employee’s acceptance of the fixed‑term arrangement through conduct.
Award and commissioner’s reasoning
After analysing the evidence, the commissioner concluded that the employee had not been dismissed. Key findings included:
There was no evidence of a board resolution allowing retirement at 70. The only documented retirement age was 65, and the employee had already drawn his pension.
The fixed‑term contract existed and both parties were aware of it. The commissioner noted that the employee received the benefits associated with the contract and continued working, thereby accepting its terms.
The employee failed to challenge his placement on retirement within 30 days, as required by the LRA. His attempt to do so a year later was therefore late.
The employment relationship ended because the fixed‑term contract expired by effluxion of time, not because the employer dismissed him. Consequently, his application was dismissed.
Lessons for employers and employees
For employers:
Document retirement policies and ensure they are communicated to employees. Having clear, written policies helps avoid disputes about normal retirement age.
Offer post‑retirement contracts cautiously. If you wish to retain a retiree temporarily, use a fixed‑term contract with clear start and end dates and ensure all parties understand that it is distinct from the original employment contract.
Obtain signatures where possible, but remember that an employee’s conduct can indicate acceptance. Keep records of correspondence and notice letters to show that the employee was aware of the contractual terms.
Provide notice of non‑renewal of fixed‑term contracts to avoid expectations of renewal and potential claims of legitimate expectation.
For employees:
Know your retirement age and obtain any deviation in writing. Verbal assurances about extending retirement age are difficult to prove.
Understand fixed‑term contracts. Accepting remuneration and working under a contract—even if unsigned—can amount to tacit acceptance. If you disagree with the terms, raise the dispute immediately rather than waiting until the contract ends.
Act promptly. The LRA requires disputes about dismissals to be referred to the CCMA within 30 days. Delayed referrals may undermine your case.
Conclusion
This CCMA award underscores that reaching the normal or agreed retirement age is not a dismissal and that employers and employees must handle post‑retirement arrangements carefully. A fixed‑term contract offered after retirement creates a new employment relationship that will end by effluxion of time. Unsigned contracts do not provide immunity if the employee continues working and enjoying the benefits. Clear documentation, timely action and adherence to retirement policies are essential to prevent costly disputes.
