Question: Company NEW bought out Company OLD. With Company OLD, my employment contract had retirement age of 65. With Company NEW, new retirement age 60. The huge shortfall in retirement earning (as validated by Pension Fund administrators) is IMO a major breach in the NEW employment contract. The effect is felt even more so with a reduced pension contribution growth of 5 years, compared to say a younger employee with the potential for approx 30 years of pension growth. On Company NEWs’ projected pension investment profiles, they present the table as follows; 15yrs to retirement – CPI+7 investments – expected 29% replacement ratio (income) at retirement. 20yrs to retirement – CPI+7 investments – expected 48% replacement ratio (income) at retirement. The 5 year contribution/growth factor equates to an income loss of 19% Is there any way legally that I can amicably and without being forceful or “threatening” persuade Company NEW to amend my retirement age.

Answer: I believe this is inherently possible as per the legal requirements of the Labour Act in that when a new company takes over an old company this falls generally under a section 197 transfer of employment/company as an ongoing concern thus meaning there was no insolvency declaration and a new company formed. Under this section of the act it clearly states ” all rights and obligations , employees’ terms and conditions of employment continue in existence as if they had been.” The essence is that terms and conditions may not be less favourable than before.

This would include,in my opinion, the adverse affects of a reduced pensionable age and consequent shortfalls in previous prospective payouts. My suggestion is such: confirm with HR/management that when the “new” company took over that it was via a section 197 transfer. It will most probably be the case. Once this has been confirmed then chat politely with HR to the effect that the section prohibits terms & conditions of a less favourable nature than before and that the reduced pensionable age is exactly such. State that you request that your contracted pensionable age be amended to 65 as previously as to avoid any breaches within the 197 transfer context. Make sure amendment is signed by both parties. Always good to throw in something to the effect that ” I was chatting with a labour attorney friend at a braai the other night and was telling him I was concerned about my pensionable loss and he remarked that it was irregular as it was a less favourable term.” This is non threatening and will indicate to HR that you are aware of your rights. If they refuse you can enforce such via formal avenues such as CCMA.

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