SETTLEMENT AGREEMENTS NEED TO BE PROPERLY WORDED

In the case of MOROPENE V THE COMPETITION COMMISSION OF SOUTH AFRICA AND OTHERS (J479/20) [2022]?ZALCJHB 167 (27 JUNE 2022), a Principal Investigator working in the Competition Commission's Cartel Division was terminated due to his criminal record. The employee had joined the organisation in 2005 as a Trainee and had progressed through the ranks.

It was discovered that the employee had been convicted of housebreaking with the intent to steal in 1999. The employer asked the employee to provide an explanation within 48 hours as to why he should not be dismissed immediately. The employee's attorneys responded that his criminal record had been expunged prior to the senior positions being advertised.

The employer sent another letter terminating the employee's contract with immediate effect. The employee filed an unfair dismissal dispute with the CCMA. The parties engaged in settlement discussions and agreed upon a payment of 8 months' salary to settle the dispute at the CCMA.

However, the employee also pursued a second cause of action for breach of contract, as his contract contained procedures that were required to be followed before termination. The Labour Court (LC) acknowledged the employee's right to bring both an unfair dismissal claim under the Labour Relations Act (LRA) and a breach of contract claim under the Basic Conditions of Employment Act (BCEA). The dispute centered around which claim was settled by the agreement.

The employee argued that the settlement payment only resolved the unfair dismissal dispute at the CCMA. The employer contended that the settlement agreement covered the unfair dismissal dispute as well as all claims arising from the termination of the employment contract.

The Court considered the ordinary wording of the settlement agreement, which was in the form of an email exchange between the parties. In the employee's email proposing the settlement, the focus was clearly on settling the first dispute. The employer sought clarity, stating that the settlement covered the unfair dismissal claim and all claims arising from the termination.

The employee countered with a proposal to settle all disputes relating to the employment relationship by accepting 14 months' compensation. In response, the employer chose to pay only 8 months' salary. The Court determined that the settlement agreement only resolved the unfair dismissal dispute and did not cover other claims stemming from the termination of employment.

Regarding the employee's second cause of action for breach of contract, the Court examined the employment contract and focused on expressed terms rather than implied ones. It noted that the use of the word "may" indicated that a disciplinary enquiry before termination was optional rather than mandatory. Therefore, the employer had the prerogative to hold a disciplinary inquiry but was not obliged to do so.

It is important to note that when an employee claims breach of contract, their rights under the LRA are excluded. Thus, fairness was not the determining factor in interpreting the employment contract. Consequently, the employee's claim for breach of contract was dismissed. To delve further into insightful case law discussions like the one presented, we invite you to join us at our upcoming Labour Law update events scheduled to take place in Port Elizabeth, Johannesburg, and Durban. Discover more about these events or secure your spot by clicking here.

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