September 19, 2017

Mutual separation agreements at work

Not many of you are aware, but there is a quick, easy and cost-effective way to get rid of that unwanted employee, without having to be dependent on a charge of misconduct, incapacity or operational requirement.

This is called a mutual separation…

An employer and employee can agree to enter into a mutual separation agreement to end the employment relationship. And the best of all is, a mutual separation agreement is not classified as a dismissal in terms of the Labour Relations Act and is broadly an acceptable practice by the CCMA and the Labour Court.

Don’t get excited too soon though, many employers do not realise that when they conclude mutual separation agreements with their employees, that such agreement must adhere to certain requirements to avoid any future upshots.

A mutual separation agreement must be in writing, signed by both parties and witnessed. It is important to ensure that at least the following is provided for in the agreement:

  1. That the terms and conditions is fully understood by the employee and that it was properly explained to him;
  2. It is in full and final settlement of all obligations between the parties;
  3. That the parties mutually agree to terminate the employment; and
  4. That the employee acknowledges that he entered into the agreement voluntarily and without duress and undue influence.

In the case of Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Limited and Another (JA 95-2014) [2016] ZALAC 2 (3 February 2016), the Labour Appeal Court considered the validity of mutual separation agreements in South Africa.

In this case a separation agreement was concluded between the parties and was “in full and final settlement of all claims of whatsoever nature and however arising between the parties”. The employee further acknowledged in the agreement that he accepted the agreement without duress or undue influence and that he voluntarily and unconditionally waived his right to any notice pay and his right to approach any relevant authority including the CCMA and/or the Labour Court for any relief against his employer arising from the agreement.

The employee approached the Labour Court and alleged that he was bullied into signing the agreement and he signed it against his will and under duress, and that the terms of the agreement restricted his constitutional right to approach a court and was therefore against public policy and invalid.

The Labour Court found that the separation agreement the parties entered into, constituted a valid concession and dismissed his application. The employee then took off to the Labour Appeal Court.  The Labour Appeal Court held that a separation agreement must be considered in law in the same manner as any other agreement.

The court confirmed that an agreement may be declared invalid if it is found that the employee entered into the same under duress, but the burden of proving such duress rests with the employee and the court held that, on the evidence before it, the employee did not proof the same.

The court then considered the employee’s argument that the agreement was unconstitutional, the court found that there was no violation of section 34 of the Constitution (the right of access to the courts), as the employee fully understood the consequences of the contractual limitations contained in the separation agreement.

The Labour Appeal Court therefore agreed with the Labour Court and dismissed the employee’s appeal.

Author: Almie Fourie

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