Can the agreement be challenged on the grounds that its interpretation or application is unclear? What if the party wishes to challenge the validity of the agreement on the grounds that it was obtained in error or as a result of undue influence, duress or misrepresentation on the part of a commissioner or the other party?
The answer to the first question is provided for in Section 24(8) of the Labour Relations Act 66 of 1995 (“LRA”), as amended which states follows:
“If there is a dispute about the interpretation or application of a settlement agreement contemplated in either section 142(A) or 158(1)(c), a party may refer the dispute to a council or the Commission and subsections (3) to (5), with the necessary changes, apply to that dispute.”
The subsections provide for the resolution of a dispute through arbitration. Therefore, a party who is aggrieved with the interpretation or application of a settlement agreement may refer this matter to the CCMA for arbitration.
Challenging the Validity of a Settlement Agreement
In the case of African Meat Industry & Allied Trade Union on behalf of Mkhungo & others and Corruseal Group & another (2) (2019) 40 ILJ 919 (CCMA) the African Meat Industry & Allied Trade Union (“the Union”) had signed a settlement agreement with the employer pursuant to negotiations between the parties. The terms of the agreement, inter alia, provided that the Union’s members would be deemed to be employees of the client.
The Union subsequently referred a dispute in terms of Section 24(8) of the LRA requesting that the settlement agreement be ‘corrected’ in line with a Constitutional judgment (the Assign Services matter) which the Union became aware of after entering into the agreement. The Union believed that the agreement was contrary to the ‘law’ and should therefore be amended.
Based on the facts, the CCMA noted that this was not a dispute concerning the wording or interpretation of the settlement agreement. The Union wanted to change the contents of the agreement and have it set aside and as such section 24(8) was not applicable. The CCMA found that “In order to have the settlement agreement set aside, the applicant ought to have approached the Labour Court in terms of s 77 of the BCEA or the civil courts”.
The above case highlights that if a party to a settlement agreement is unhappy with the validity of the agreement the CCMA lacks jurisdiction to set aside the agreement and either the Labour Court or High Court should be approached to decide this issue.
In the case of Cindi v Commission for Conciliation, Mediation & Arbitration & others (2015) 36 ILJ 3080 (LC) the employee referred an unfair dismissal dispute to the CCMA.
At the conciliation proceedings, the employee was informed by the Commissioner that she had no prospects of success in the matter. Consequently, the applicant signed a settlement agreement which stated as follows “In full and final settlement of the dispute the applicant received R1,825.02 from the Road Freight Agency Council on 21 September 2013”. The settlement agreement was not made an arbitration award in terms of section 142A of the LRA.
The employee thereafter attempted to bring an application to the Labour Court to review the agreement and contended that the commissioner had exceeded his powers and had unduly influenced her to conclude the agreement. On review, the Court held that a settlement agreement that has not been made an arbitration award in terms of section 142A cannot be reviewed.
The Court further highlighted that when the commissioner facilitated the settlement agreement he had no decision-making powers and the fact that the commissioner may have committed reviewable conduct during a conciliation process did not necessarily nullify the agreement which had been entered into after the conduct. The Court further noted that “any challenge to an agreement that has come into existence due to alleged undue influence by a commissioner lies in the common-law principles of contract — the settlement agreement can be challenged on the grounds of impossibility of performance; duress and/or undue influence; or misrepresentation and/or fraud” (Emphasis added). The Court held that there was no basis upon which the settlement agreement between the parties could be reviewed.
In the case Ulster v Standard Bank of SA Ltd (2013) 34 ILJ 2343 (LC), the employee was dismissed by the Standard Bank (“the Bank”) for poor performance. The employee referred a dispute to the CCMA and at conciliation the parties signed a settlement agreement.
However, later the employee was unhappy with the terms of the agreement and then approached the Labour Court for an order setting aside the settlement agreement on the basis that she had not entered into it willingly, and had been coerced by her union’s legal representative. The Labour Court confirmed that a party who wishes to have the settlement agreement set aside will need to prove, on a balance of probabilities and in terms of our common law of contract, the allegation of duress. Upon examining the facts, the Court found that the employee had understood the terms of the agreement and was, as a result, bound by the terms of that agreement.
From the above cases it can be seen that settlement agreements are legally binding and parties need to be sure that they are happy with the terms of the agreement before signing the document. It is not possible to simply approach the CCMA to set aside the agreement. If a party is unhappy with commissioner’s conduct in facilitating a settlement agreement a review may be brought to the Labour Court but this would not affect the validity of a signed settlement agreement. The aggrieved party can only hope to set aside a settlement agreement by bringing a civil claim either to the Labour Court or High Court on the basis of impossibility of performance, fraud, duress and/or misrepresentation. The legal requirements for these claims are onerous and difficult to prove and specialised legal advice should be sought prior to bringing such a claim.