When settlements don’t settle: A guide to challenging CCMA settlement agreements

by | Apr 26, 2023 | Employment law | 0 comments

As an attorney practising in South Africa, I often encounter clients dissatisfied with the settlement agreements reached in employment disputes. While the Commission for Conciliation, Mediation and Arbitration (CCMA) is a valuable forum for resolving workplace disputes, it is common for parties to regret the settlement agreement terms they entered into.

The question often arises as to whether a CCMA settlement agreement can be challenged in South Africa. The short answer is yes, but the process and grounds for challenging the settlement agreement are challenging and will depend on the specific circumstances of your case.

Overview

Firstly, it is essential to understand the nature of a settlement agreement. A settlement agreement is legally binding between the parties to a dispute. It may or may not be facilitated by the CCMA commissioner. Once a settlement agreement is signed, it becomes final and binding, and its terms bind the parties. Therefore, it is essential to consider the terms of any settlement agreement before signing it.

Suppose you believe that the settlement agreement was reached, for example, under duress, fraud or misrepresentation. In that case, you can apply to the High or the Labour Court to set aside the settlement agreement. In such cases, you must provide evidence to support your claim. 

Some Cases 

Challenging the Validity

A valid contract is an agreement which is binding and enforceable, thus challenging the validity pre-supposes that the legal requirements of a valid contract were not met.

Generally speaking the requirements of a legally binding agreement are:

  • Consensus 
  • Possibility of Performance
  • Legal Capacity to Contract
  • Legality
  • The necessary Formalities must be Complied with

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. The terms of the agreement, among other things, provided that the Union’s members would be deemed employees of the client.

 Based on the facts, the CCMA noted that this was not a dispute concerning the wording or interpretation of the settlement agreement. Instead, the Union wanted to change the contents of the contract and have it set aside, and as such, section 24(8) of the Labour Relations Act 66 of 1995 as amended (“LRA”) was not applicable. Accordingly, the CCMA found: “In order to set the settlement agreement aside, the applicant ought to have approached the Labour Court in terms of section 77 of the Basic Conditions of Employment Act 75 of 1997 as amended (“BCEA”) or the civil courts”.

 Thus either the Labour Court or High Court should be approached to decide this issue.

Undue Influence

From our dictionary understanding, undue influence is when a person is induced to act otherwise than by their own free will or without adequate attention to the consequences. In the presence of undue influence, consensus (a common law contractual requirement) was never reached. 

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 Commissioner informed the employee that she had no prospects of success in the matter. Consequently, the applicant signed a settlement agreement. The settlement agreement was not made an arbitration award in terms of section 142A of the LRA.

On review, the Court held that a settlement agreement that has yet to be made an arbitration award under section 142A could not be reviewed.

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, i.e. “impossibility of performance; duress and/or undue influence; or misrepresentation and/or fraud”. Accordingly, the Court held that there was no basis upon which the settlement agreement between the parties could be reviewed.

Duress

From our dictionary understanding, duress is threats, violence, constraints, or other actions used to coerce someone to do something against their will or better judgement. In the presence of duress, consensus (a common law contractual requirement) was never reached. 

In the case, Ulster v Standard Bank of SA Ltd (2013) 34 ILJ 2343 (LC), the employee was dismissed by Standard Bank (“the Bank”) for poor performance. The employee referred a dispute to the CCMA, and the parties signed a settlement agreement at conciliation.

The Labour Court confirmed that a party who wishes to have the settlement agreement set aside would need to prove the allegation of duress on a balance of probabilities and in terms of our common law of contract. 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.

 Conclusion

In conclusion, while it is possible to challenge a CCMA settlement agreement in South Africa, it is essential to carefully consider the terms of any settlement agreement before signing it. For example, suppose a party is unhappy with the Commissioner’s conduct in facilitating a settlement agreement. In that case, a review may be brought to the Labour Court, but this would not affect the validity of a signed settlement agreement. T

he aggrieved party can only hope to set aside a settlement agreement by bringing a civil claim to the Labour Court or High Court based on the common law grounds such as e.g.  the impossibility of performance, fraud, duress and/or misrepresentation. 

It is advisable to seek the assistance of an experienced contract and labour law attorney to guide you through the process.

Contact an expert at SchoemanLaw today for your legal needs. 

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