It is not unusual for an employer and an employee to enter into agreements which result in the employment of an employee being terminated by agreement. Often these agreements will provide for the payment of a sum of money (such as a voluntary separation package) as an inducement for the employee to agree to the termination of employment.
If the employer fails to pay comply with the agreement the employee will typically have the normal contractual remedies available to enforce the agreement; but the recent decision of the Labour Appeal Court (“LAC”) in Greeff v Consol Glass (Pty) Ltd (2013) 34 ILJ 2835 (LAC) illustrates that the employee may have another potential remedy at his disposal. The employee may seek to have the agreement made an order of court and, in the event of a failure by the employer to comply with this order, to hold the employer in contempt of court.
The employer in this matter had embarked on a restructuring exercise. During this process the employer entered into an agreement with the applicant employee in terms of which her employment would terminate and she would receive a severance package. A day or two after the agreement was concluded, the employee informed the employer that she would be taking up employment with another employer at a date prior to the formal date of termination of employment contained in the agreement. The employer took the view that she had resigned and that she was not entitled to the agreed severance package and refused to pay the package.
In these circumstances the employee could have instituted a contractual claim in order to attempt to enforce the agreement. Instead she sought to have the agreement made an arbitration award in terms of section 142A of the Labour Relations Act, 66 of 1995 (LRA) on the basis that this agreement constituted a settlement agreement as defined in this section. The CCMA commissioner granted the application. This was then overturned by the Labour Court on review on the basis that this section only applied to settlement agreements that settled disputes that had been referred to the CCMA.
She then applied to the Labour Court for the agreement to be made an order of court in terms of section 158(1)(c) of the LRA. This provides that the Labour Court may –
“ … make any arbitration award or any settlement agreement an order of the Court;”
This must be read with section 158 (1A) which provides that -
“For the purposes of subsection (1)(c), a settlement agreement is a written agreement in settlement of a dispute that a party has the right to refer to arbitration or to the Labour Court, excluding a dispute that a party is only entitled to refer to arbitration in terms of section 22(4), 74(4) or 75(7).”
The Labour Court refused to make the agreement an order of court. The employee appealed to the LAC. The LAC therefore had to decide whether the agreement entered into between the employer and the employee constituted a settlement agreement as defined. It found that it did. As will be seen from the excerpt below, it based its decision on the view that an important policy consideration underlying the LRA is that labour disputes should be settled as expeditiously as possible.
“ Making settlement agreements orders of court may be regarded as important for the protection of the rights of the parties to the settlement. It not only facilitates and enables execution through court processes, but would enable an aggrieved party to institute contempt proceedings if the order of court is not complied with. If the word 'right' in s 158(1A) were to be given a strict meaning, consequences would ensue that cannot be said to be consistent with the aims and objects of the LRA. With regard to the kinds of dispute envisaged in s 191 of the LRA — the power of the Labour Court to make settlements orders of court would be limited to those settlements entered into after failed conciliation and a certificate has been issued to that effect, or in respect of which 30 days elapsed from the date the dispute was referred to the council or CCMA, but which remained unresolved. Parties would be reluctant to enter into settlement agreements before the aforementioned events have occurred, because they would not be able to make their agreements orders of court. … The only settlement agreements that the CCMA would be empowered to make awards would be those concluded after failed conciliation and a certificate had been issued to that effect, or 30 days had elapsed since the dispute had been referred to the CCMA and the dispute remains unresolved. Giving a strict meaning to the word 'right' in s 158(1A) would have the effect of differentiating between those settlements concluded before and those concluded after the statutory events pertaining to conciliation had occurred. Other than purporting to limit the potential number of applications to make settlements orders of court, there appears to be no rational basis for such differentiation. Moreover, any retardation, or discouragement of the early settlement of disputes is not consistent with the objects of the LRA, namely, the resolution of disputes as speedily as possible, in an efficient and cost effective manner. Lingering, unsettled disputes are not conducive to stability in the workplace and militate against the principle aims of the LRA in that respect.”