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Agreement of full and final settlement, the end of the Road?

Agreement of full and final settlement, the end of the Road?

When parties enter into a full and final settlement agreement in order to terminate the employment relationship, most employers are of the opinion that the matter has been settled and that the employee has waived his/her right to refer the matter to the CCMA.

However, in the recent Labour Court award of Cook4Life CC v CCMA and Others (2013) 34 ILJ 2018 (LC) it was held that “where an employee claims that he was induced by duress to have entered into the agreement the CCMA was empowered to pronounce on the agreement as part of its jurisdiction to determine the existence of a dismissal.”

Section 192 of The Labour Relation Act 66 of 1995 (LRA) provides that in any proceedings concerning an alleged unfair dismissal, an employee must establish the existence of the dismissal. Once this has been established, the onus is then on the employer to prove that the dismissal was fair.

For an employee to prove that a dismissal exists, he/she will have to prove on a balance of probabilities that he was induced by duress to sign the settlement agreement. Duress can come in different shapes and forms.

Experian SA (Pty) Ltd v Haynes and Another [2013] 34 ILJ 529 (GSJ) confirmed that the party intending to rely on duress, had to allege and prove that there was a threat of considerable evil. To such an extent as to induce a reasonable fear of imminent or inevitable evil and that the threat or intimidation was unlawful and contra bone mores (contrary to public policy or moral turpitude) and the moral pressure used must have caused damage. In Gbenga-Olawatoye v Reckitt Benckiser SA and Another [2016] 5 BLLR 425 (LAC) it was found that in order to obtain an order setting aside a contract on the ground of duress, actual violence or reasonable fear must be shown.

However, in Medscheme Holdings (Pty) Ltd & Another v Bhamjee [2005] (5) SA 339 (SCA) the courts also recognised that in appropriate cases economic pressure or a threat of economic harm could constitute duress, but that hard bargaining does not equate to duress, nor does an imbalance in bargaining power.

Therefore, it is important that when parties enter into negotiations and upon signing a settlement agreement that employees are explained the contents of the settlement agreement. The mere inclusion of a ‘no duress’ clause may not be sufficient. Furthermore, that there are witnesses present who can testify that the parties entered into the agreement out of their own free will and that there was no element of duress visible.

Article by: Aletta Eksteen – Dispute Resolution Official – Cape Town


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Originally appeared on ceosa.org.za on 23-08-2019. The views expressed herein are those of the author and do not necessarily reflect those of estome. estome accepts no responsibility for the accuracy, completeness or fairness of the article, nor does the information contained herein constitute advice, legal or otherwise.

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