News & Resources

Is an employee settlement agreement bulletproof?
06 August 2015  | Tata Mokwayi
“My business recently had to pursue disciplinary action against an employee. This was a difficult decision and process but we eventually reached a settlement in terms of which the employee agreed to resign and concluded a settlement agreement to that effect. I thought the matter was put to rest but now I hear the employee is going to take us to the CCMA. Surely he cannot override our settlement agreement and do this?”

A primary objective of the Labour Relations Act is to encourage parties to resolve their own labour disputes and not have to make use of formal dispute resolution mechanisms. Accordingly, should parties be able to resolve their own labour disputes by way of for example entering into a voluntary written settlement agreement either before, during or after a disciplinary hearing or retrenchment exercise, this is an acceptable method of laying a matter to rest and often helps avoid the parties having to air their dirty laundry in public. Such a settlement agreement usually determines that the matter is settled in full between the parties and that the employee cannot approach the CCMA with an unfair dismissal or unfair labour practice claim.

However, the Labour Appeal Court recently held in Builders Warehouse (Pty) Ltd v CCMA that the resolving of an unfair dismissal and/or unfair labour practice through a settlement agreement does not oust the jurisdiction of the CCMA from hearing the matter and dealing with the merits thereof. This means that a settlement agreement that is a 'full and final settlement’ and entered into willingly by an employee is not immune to review and further investigation. In the Builders Warehouse case it was held that the implementation of an agreement to accept demotion may constitute an unfair labour practice allowing the CCMA to have jurisdiction to conciliate over the matter which was finalised through a settlement agreement. The Labour Court held that the CCMA was able to consider the issue, despite any agreement, but that the presence of such an agreement would be a factor to be considered with the onus resting on the employee to prove the unfair conduct.

This means that an employee, even in a case such as yours where a settlement agreement was concluded, could still refer the matter to the CCMA, but that the onus will now be on the employee to show that the dismissal was unfair and that the settlement agreement should not apply.
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