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enforceability-of-separation-agreements-1This means that no dismissal has occurred and therefore the subsequent right to proceed with CCMA and/or Labour Court cases have been waived.

These agreements are utilised to a much lesser extent than they ought to be due to the fact that negotiations on these agreements are usually conducted at an emotionally fragile time, when both parties may feel aggrieved by the other. Most settlements of this nature are reached when the parties are on the steps of the court and the costs, prospect of cross-examination and other realities set in.

The Constitutional Court judgment of Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd provides comfort to employers who are reluctant to enter into separation agreements as, in this case, the Constitutional Court strongly endorsed the enforceability thereof.

In this case, an employee admitted that he had misrepresented the identity of his former employer, which caused Reckitt to pay him a sign-on bonus of US$40,000.  He entered into a separation agreement with his employer in terms of which he waived all recourse to the Commission for Conciliation, Mediation and Arbitration (CCMA) or the Labour Court.  The employee argued that he had been coerced into entering the agreement and more specifically, that the waiver was against public policy as he should not be barred from obtaining judicial redress.  The Court found that the agreement should be upheld considering that the employee occupied a senior management position and understood the terms of the agreement, which protected him from the “possibility of a disciplinary process that could wound his career irremediably.”

The Court emphasised that no party could be lightly released from a settlement agreement, and thus dismissed the employee’s application for leave to appeal with costs.