Exiting the exit agreement: a departing employee’s claims of coercion and duress

It happens with some regularity that an employee refers a dismissal dispute to the CCMA, and the employer arrives at the hearing bearing a termination agreement with the employee’s signature. In it, the employee agrees to resign from employment, often in return for some benefit such as an extra month or two’s pay, or the privilege of leaving honourably rather than being dismissed and incurring a disciplinary record for serious misconduct. The employee will usually concede that they signed the agreement, but argue that they were bullied into it. The CCMA commissioner will advise them that the agreement is binding until set aside by the Labour Court on solid grounds, such as duress, and close their file.

In the recent matter of Gbenga-Oluwatoye versus Reckitt Benckiser SA, an employee went as far as approaching the Labour Court and, thereafter, the Labour Appeal Court, in his quest to get out of a termination agreement he admitted signing with the employer.

The employee was approached by a headhunter while employed in a lucrative position with a large multinational. He later left his lucrative position, but actively concealed this from the headhunter, negotiating a generous sign-on bonus on the false basis that he was losing a handsome shareholding by leaving the large multinational to join the employer. In short, he deceived and defrauded the new employer.

Some months into his employment with the new employer, the employee’s misconduct came to light. He was suspended pending a disciplinary hearing,  and then summarily dismissed. On receipt of his termination letter, the employee approached the employer requesting a “softer exit”. He offered to repay the money over time, in exchange for the employer delaying action to revoke his work permit and housing allowance. The employer agreed, and the employer expressed his gratitude for the humanity shown him.

A termination agreement was then drawn up in draft form. The employee was unwilling to sign the first draft, but agreed to sign a second draft. The agreement recorded that it was in full and final settlement of any claims between the parties, and that it was entered into voluntarily without any coercion or pressure. The employee agreed, in the agreement, that he waived any right to approach the CCMA and Labour Court arising in any way from his employment and the termination agreement.

A week later, however, the employee brought an urgent application to the Labour Court, for an order setting aside the termination agreement and reinstating him into his employment. He argued that the agreement was against public policy and that he had been coerced into signing it through fear of losing his work permit and housing and other allowances.

The Labour Court was unsympathetic. It had regard to the fact that the employer had a legal entitlement to dismiss the employee summarily on account of his serious misconduct, and also the fact that the agreement had been further negotiated after the employee had been dissatisfied with the first draft. There were no facts to indicate that he signed the agreement only as a result of duress by the employer.

The employee was unrelenting, and took the matter further to the Labour Appeal Court, on appeal.

The Labour Appeal Court pointed out that, in order to get out of an agreement on the basis of duress, intimidation or improper pressure had to be proven of such magnitude that the purported consent of the signatory was no true consent. There had to be actual violence or a fear caused by the threat of a considerable evil. The threat had to be unlawful or against the morals of the community.

Although the Court did not point this out, it goes without saying that the loss of a work permit and of allowances due to termination of employment by resignation or by summary dismissal for gross misconduct, are lawful and reasonable consequences. They cannot be construed to be unlawful or against the morals of the community.

The Court did point out that, while everyone has the constitutional right to seek redress through the courts, this right could be limited in reasonable circumstances. Parties were free to limit this right in their free contractual dealings. The Court found that the employee was an experienced, senior managerial employee, who would understand the import of what he was agreeing to. Clauses limiting the right of redress were standard in termination agreements, and of practical value.

Finally, the Court point out that it had no power to set aside agreements simply because they appeared to be unfair.

The Court accordingly upheld the termination agreement, and dismissed the employee’s application with costs.

Caveat subscriptor – “signer, beware!” – is a well-worn legal maxim for good reason. All parties should be slow to sign any agreement unless they are completely satisfied with the terms, and should be aware that by signing an agreement they trigger important legal consequences which cannot be easily evaded. In the absence of compelling evidence of significant unlawful pressure, a party who foolishly signs an unfair or prejudicial agreement, will be held to its terms.

 

 

 

Key changes to the labour laws in 2015 – part 5: SOME RELIEF FOR AGGRIEVED EMPLOYEES IN SMALL RETRENCHMENTS

Prior to 2002, any dispute arising from an employee’s retrenchment from work, had to go to the CCMA for conciliation (a sort of mediation) and thereafter, if not resolved, to the Labour Court for adjudication after a full trial. This was of course costly, time-consuming and complex, and deprived a great many employees from access to justice. Those who did not have personal wealth or the support of a well-resourced and capable trade union, could often not afford legal representation to pursue their dispute, and lacked the skills to pursue the dispute as an unrepresented layperson.

In 2002, the legislature amended the Labour Relations Act to state that an employee who was dismissed following a retrenchment process that applied to her only, had an election to approach either the Labour Court for adjudication of the dispute, or the CCMA for arbitration.

This proved to be insufficient, however, as it did not assist other employees in a similarly isolated and vulnerable position in the retrenchment context.

This year, the legislature again amended the Act, now to extend the election between approaching the Court or the CCMA also to:

  • single employees retrenched, even where the preceding processes involved a larger pool of employees; and
  • employees retrenched by smaller employers (with ten of fewer employees) no matter how many employees were retrenched.

Whilst this is a move in the right direction, the different treatment of dismissals for conduct or capacity (which go to the CCMA for arbitration) and dismissals due to retrenchments (which usually go to the Labour Court for adjudication) is still open to criticism. The apparent rationale that retrenchment disputes are more complex may not be valid, and a more sweeping amendment allowing all employees in retrenchment disputes to elect to approach the CCMA instead of the Labour Court, would arguably be more appropriate.

Key changes to the labour laws in 2015 – part 1: EASIER ENFORCEMENT OF CCMA AWARDS

The long-awaited Labour Relations Amendment Act came into effect, in large part, on 1 January 2015. It brought about a number of changes in both individual and collective labour law. In this series, we consider the key changes affecting individual labour law, and of which employees and employers alike should take note.

Prior to 2002, an employee who succeeded at the CCMA but whose employer ignored the CCMA’s award, had a steep hill to climb to get satisfaction. The employee would need to approach the Labour Court and have the award made an order of court, before having a writ of execution issued and handed to the sheriff of the court. This involved a full application to court supported by an affidavit, to be served under the rules of court, and awaiting and responding to any notice of opposition and answering affidavit from the employer. The employee would need to appear before a judge to secure an order against the employer. It was a complex and intimidating process for a layperson, time-consuming, and could increase costs drastically.

In 2002, the law was changed in order to assist employees in enforcing awards. Instead of approaching the Labour Court with a full application on notice and on affidavit, the employee returned to the CCMA to have the award certified. Once the award was certified, the employee went to the Labour Court to have a writ of execution against the employer issued over the counter. This was handed to the sheriff of the court for enforcement. This was a much simpler, cheaper, quicker process. However many employees still found the process, in particular dealing with two institutions, confusing and frustrating.

As of 2015, the process for enforcement is even more streamlined. Our law now states that an arbitration award may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued. An employee battling with a recalcitrant employer must still have the award certified at the CCMA as previously, but then can take her certified award directly to the sheriff of the court for execution. There is no longer any need to involve the Labour Court, provided the award requires the employer to pay over money (as opposed to doing something – such as taking the employee back into employment. Where the award requires the employer to do something, other than pay over money, contempt proceedings in the Labour Court remain appropriate.)

The new law only applies prospectively, to arbitration awards issued after 1 January 2015.

The tariffs and procedures for enforcement and execution will be those that apply in the magistrates courts, which seems appropriate given that in almost all cases the amounts of money involved in awards will fall within the monetary jurisdiction of the magistrates courts (R300 000,00 or less).

Disputes with Pension Funds

What can a member or former member of a pension fund do to resolve a dispute with the fund, or with their employer about their participation in the fund?

Four main types of disputes arise:
• The fund may exercise its powers improperly, or do something which it is not entitled to do;
• The fund can be poorly administered, causing you prejudice;
• You and the Fund may disagree on an important fact or matter of law;
• Your employer may not be fulfilling its duties where your membership of the Fund is concerned.

The Pension Funds Act sets out the procedure you may follow in order to have your dispute addressed.

First, you are required to send a written complaint to the Fund (or employer, if applicable). You must keep a copy of your complaint as well as your proof that it was sent. They have 30 days in which to respond to your complaint. If they do not respond, or if their response does not resolve the dispute to your satisfaction, you may take the matter to the Pension Funds Adjudicator (PFA).

The PFA has a simple online form which enables you to submit your complaint to them quickly and easily. It is found on their website at http://www.pfa.org.za. You can only submit a complaint to the PFA once you have first complained to the Fund (or employer) and 30 days have elapsed.

The online form helps ensure that you submit all necessary information. In brief, this includes your personal details, the Fund’s details (or employer’s), your dates of joining and leaving the Fund (or employer), your complaint in detail, the outcome you desire, as well as proof that you first complained to the Fund (or employer). Copies of all relevant documents must be supplied.

The PFA may require a written response from the Fund (or employer) and may also investigate the matter further by phoning the parties or engaging in correspondence. A decision will be made in writing and communicated to the parties, and this decision has the force of a judgment of a court. If the PFA rules that the Fund must make a payment to you of money, then this is enforceable via the sheriff of the Court in the same way as a court order.