a MSA is no safe way out of the CCMA
The CCMA cannot arbitrate an alleged unfair dismissal dispute if it can be shown that the employee indeed had not been dismissed. Typically, when an employee resigns (unless claiming a constructive dismissal), or having had entered into a Mutual Separation Agreement (MSA) with his or her employer, the argument goes that there was no dismissal, hence the CCMA lacks jurisdiction.
Often employers desiring to terminate the services of an employee without going through a LRA process, will resort to compel an employee to enter into a mutual separation and thus agree to a termination of services by consent. A MSA typically has a provision that such agreement is in full and final settlement of the dispute. Employees, however, often complain that they signed such an agreement under duress or in circumstances whereby the employer made a material misrepresentation.
Generally, once an employee signs a MSA and file an unfair dismissal dispute to the CCMA, the CCMA lacks jurisdiction to arbitrate leaving the employee only with the option to refer the validity of the MSA to the Labour Court in an effort to have the agreement null and voided. The reason is that the CCMA generally do not have the jurisdiction to deal with contracts and agreements. This was enforced in First National Bank v Mooi and another (2009) whereby the Labour Court held that only the Labour Court or a civil court has jurisdiction to make determinations on the validity of agreements, including employment contracts, settlement agreements, collective agreements and the like.
In Cooks4life vs Lourens de Bruyn, the Labour Court held a different view. In casu, the employee entered into a mutual separation agreement , yet filed an unfair dismissal dispute to the CCMA. The employer objected against the jurisdiction of the CCMA to conciliate the dispute as CCMA Rule 14 provides that the conciliating Commissioner to determine any jurisdictional issue that may be brought to his attention. The Labour Court found that the Commissioner has a discretion to deal with a jurisdictional matter or to defer the issue to the arbitration Commissioner to determine the matter. In essence, a certificate of outcome, in itself, has very little legal standing and does not mean that the CCMA has jurisdiction or not.
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In terms of whether the CCMA has jurisdiction to entertain an unfair dismissal dispute whereby the employee challenge the validity of the MSA claiming to have signed it under the duress, the Labour Court ruled that Section 191 of the LRA contemplates that the CCMA make a ruling when the existence of a dismissal is placed under issue. There is no point in having an employee first file a contractual dispute to the Labour Court only to thereafter being able to refer an unfair dismissal dispute to the CCMA as this will defeat the statutory purpose of informal and expeditious dispute resolution. The CCMA indeed is empowered to determine whether a MSA is voidable on account of it having been induced by duress.
The Labour Court in Schroeder and another v Pharmacare Ltd t/a Aspen Pharmacare upheld this view.
What we learn from this case is that employers cannot depend on the CCMA lacking jurisdiction to arbitrate the fairness of a dismissal dispute in circumstances whereby parties entered into a mutual separation agreement. Commissioners are empowered to determine whether a MSA should be voided if an employee entered into the MSA under duress.
It is advisable for employers to seek professional advise. Tobie Nel is the Managing Director for Effectus Harmony (Pty) Ltd and has over 15 years’ experience in Labour Law. You can contact him, by phone: 0824479512, by email: tobie@effectusharmony.co.za
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1yThanx for sharing
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1yVery interesting.