What happens once the horse has bolted.

Mar 28, 2023 | News

More often than not, when a dismissal sanction is looming, employees enter into mutual separation agreements with employers to avoid tainted employment track records.

Some employers, with the hope of avoiding unfair dismissal disputes before the Commission for Conciliation, Mediation and Arbitration (“CCMA”), enter into mutual separation agreements with employees, whilst some employers out of goodwill enter into such agreements with employees to assist in preserving such employees track records.

These arrangements are not without ramifications. Where an employee was not yet dismissed or when a dismissal sanction is imminent, and the employee in an attempt to preserve their employment track record enter into a mutual separation agreement, and such an employee, pursuant to the conclusion of the mutual separation agreement, is unsatisfied with the separation terms for reasons known to them, cannot refer an unfair dismissal dispute to the CCMA because the CCMA does not have jurisdiction to arbitrate disputes where there is no employer-employee relationship.

The Constitutional Court in Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Limited and Another (2016) 37 ILJ 2723 (CC) held that, when parties settle an existing dispute in full and final settlement, none should be lightly released from an undertaking seriously and willingly embraced. This is particularly so if the agreement was, as here, for the benefit of the party seeking to escape the consequences of his own conduct. Here the constitutional court confirmed the validity and enforceability of mutual separation agreements.

In certain instances, employees will request to resign after being dismissed. The employer, out of goodwill, will, in light of the dismissal, allow the employee to resign alternatively enter into a mutual separation agreement with the employee.

The implication of such agreements is that the mutual separation agreement is void ab initio because it is concluded post-employment. At such a point, the employee is no longer an employee; therefore, an agreement cannot be concluded to terminate a non-existent employer-employee relationship, nor can the employee resign from a non-existent employment relationship.

Where this is the case, the employee can refer an unfair dismissal dispute to the CCMA provided that the employee reasonably believes that the dismissal was unfair alternatively, the employee was unfairly dismissed.

It is however possible for the employer and the employee to agree to retract the sanction of dismissal and agree that it is replaced with a resignation by the employee. The aforegoing then constitutes a settlement agreement and the employee will not be in a position to refer an unfair dismissal dispute to the CCMA as the settlement agreement has the effect of compromising the claim of an alleged unfair dismissal and the CCMA or any other forum will not have jurisdiction to determine the matter.

Ephraim Lehutso
Fairbridges Wertheim Becker Attorneys