VALIDITY OF SETTLEMENT CAN BE LEGAL HEADACHE

As usual, it is very important to follow the guidelines as stipulated in the Basic Conditions of Employment Act. If you are not sure of what to do, contact a reputable Labour Attorney. Do not, and I repeat Do Not - get advice from someone who is not qualified and who doesn't understand the law, it will only cost you more money and more headache in the long run!

Validity of settlement can be legal headache
Tony Healy

16 August 2007 at 06h00

Full and final settlement agreements often lead to subsequent labour disputes, much to the chagrin of employers.Invariably, the agreements are signed between an employer and an employee with the employer believing that the employment relationship has been lawfully terminated and the matter disposed of.

Typically, employees challenging the validity of a full and final settlement agreement do so on grounds that it was signed by them under duress, and off they trundle to the CCMA to put their case. The first question which arises at the CCMA is whether or not the CCMA has jurisdiction to determine the validity of the agreement. Interestingly, it has been reported that Judge Zondo of the labour court has voiced concern over the fact that there appears to be an overlap of jurisdiction.

In particular, the High Court is often confronted to determine whether it has the jurisdiction to adjudicate labour disputes even though the labour court exists for this purpose. This issue was addressed in the CCMA arbitration case of Carl de Wet and Francotyp-Postalia SA (Case No GA69233).

In this case, the employer and the employee had concluded and signed a termination agreement. The agreement made provision for the employee's services to be "terminated with immediate effect" and that the employee would receive his notice pay and other statutory payments "as final settlement of this matter". At the arbitration hearing, the company contended that this agreement constituted a final settlement of the matter and that no further disputes existed between the parties. The employee on the other hand, argued that he had signed the agreement under duress.

The commissioner in his award, stated that "the CCMA is not a forum which has jurisdiction to inquire into whether or not a contract concerning termination of employment is valid or not". The arbitration award makes reference, inter alia, to the CCMA arbitration case of Mark Langley v Billiton SA in which it was held that "the CCMA is an administrative tribunal created by statute with limited powers specified in the Act.

The commissioner has no jurisdiction to inquire into matters not specified in the Act. "It follows therefore that the CCMA is not empowered to consider matters of a contractual or delictual nature unless expressly provided for in the Act."

A further reference was made to Moolman v Border Technikon in which it was held that "if the applicant challenges the validity of the settlement agreement, that challenge must be made at a different forum and the applicant is confined to his remedies on that agreement, which remedies must be sought in the ordinary courts".

A case in point - Tseku v Shell Ultra City (Mthatha) CCMA Arbitration ECEL3040-06

The applicant had been appointed as a general manager on a six-month probation period. He was dismissed at the end of the 5th month for failing to meet prescribed performance standards. He felt his dismissal was unfair in that his performance had not been assessed and that the respondent had failed to prove that he was under-performing.

The respondent said the applicant had been informed of the performance required of him. However, the respondent failed to lead any evidence supporting the contention that the applicant's performance was poor. The applicant was afforded a hearing prior to his dismissal, but even giving due consideration to the less onerous requirements for a fair dismissal during probation (on grounds of poor work performance) the respondent had neither assessed nor proved the alleged poor work performance.

The dismissal was held to have been both procedurally and substantively unfair, and the applicant was awarded one months compensation.