Be careful when concluding mutual separation agreements!

The Labour Appeal Court (“LAC”) considered the validity of a mutual separation agreement in the case of Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd & 1 Other.


In this case, the employee was dismissed for misrepresentation. However, he negotiated a “softer exit” and the parties concluded a mutual separation agreement. By signing this agreement, the employee acknowledged that it was a full and final settlement and that he was not forced nor coerced to enter into the agreement. Further to signing the separation agreement, the employee signed an acknowledgement of debt in favour of the employer in an amount of USD 40 000.00.


A week after he had signed the agreement, the employee approached the Labour Court (“LC”) with an urgent application to declare the separation agreement invalid and to set it aside on the basis that he was coerced into signing the agreement against his will and under duress. The employee further alleged that, amongst other things, the agreement was contrary to public policy and violated his constitutional right to seek judicial redress as it contained a clause that waived his right to approach the Commission for Conciliation Mediation and Arbitration or any other court for relief emanating from his employment with RBS.


The LC dismissed the employee’s application and concluded that the agreement was valid. The employee then took the matter on appeal to the LAC. The LAC held that the employee had the burden of proving the existence of duress. RBS denied the allegations stating that the separation agreement was signed freely and voluntarily without duress. The LAC came to the conclusion that there was no duress and as such refused to declare the separation agreement invalid.


The matter eventually ended up in the Constitutional Court, however the application was dismissed for lack of prospects of success.


In a nutshell, employees are encouraged to be extra cautious when concluding mutual separation agreements. When in doubt, rather contact MISA for guidance, prior to signing any agreement.


MISA is just a phone call away.

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