Matthias  Ruziwa Hr Issues

“Employment contracts may be terminated by mutual agreement of the parties. Mutual in my view suggests a meeting of the minds, or commonality of purpose.“The legal basis of mutual termination agreements is rooted in freedom of contract as a constitutional right”.Section 12 (4a) of the Labour Amendment Act, No 5 of 2015 reads,

“No employer shall terminate a contract of employment on notice unless:

(a) The termination is in terms of an employment code or, in the absence of an employment code, in terms of the model code made under section 101(9); or

(b) The employer and employee mutually agree in writing to the termination of the contract or

(c) The employee was engaged for a period of fixed duration or for the performance of some specific service; or

(d) Pursuant to retrenchment, in accordance with section 12C.

The easiest way for an employer to terminate an employment contract is by reaching an agreement with the employee. A specific provision regarding mutual termination agreement is clearly spelt out in the labour law.

However, I must point out that mutual termination agreements are of a cancellation agreement nature, in terms of legal status.

The validity of the mutual termination agreement does not depend on any required specific form but when executed, a mutual termination agreement may be manifested either explicitly or implicitly, and must be in writing in order to demonstrate the common will of the parties regarding cancellation of the employment contract. it is sometimes debatable if the termination was truly mutual.

In the matter between GAUNTLET SECURITY SERVICES (PRIVATE) LIMITED v LAST HLABANGANI, Judgement No SC 51 /04, the respondent (Hlabangani) was employed by the appellant (Gauntlet Security) as a security guard on February 5 1996. His contract of employment was terminated on September 12 1997.

During the time he was employed by Gauntlet Security, Hlabangani was occasionally unable to perform his duties because of ill-health. He was on sick leave on no less than four occasions during the period of nineteen months he was with the appellant.

On September 3 1997 Hlabangani wrote a letter to Gauntlet Security management asking for financial assistance to pay hospital bills. On September 11 a meeting was held between Gauntlet Security’s personnel manager and Hlabangani.

The effect that Hlabangani’s ill-health was having on the performance of his duties was discussed. The parties also discussed the question whether it was not in the best interests of both of them to have the contract of employment terminated by mutual agreement. Hlabangani was given until the following day to reflect on the matter.

On September 12 1997, he signed a document in which he said he agreed to terminate his contract of employment on payment by Gauntlet Security of wages in lieu of a month’s notice.

He admitted that he signed the document containing the terms on which the contract of employment was to be terminated by mutual agreement.

He claimed however that he signed the document not with the intention of binding himself under a mutual agreement to terminate the contract of employment but because he wanted to get the terminal benefits.

He did not say that he was forced to sign the document nor did he deny that by conduct he led his employer to believe that he was agreeable to a mutual termination of the contract of employment.

After collecting the terminal benefits and using them Hlabangani lodged a complaint of unfair dismissal with the local joint committee of the National Employment Council for the Commercial Sector.

He alleged that he had not intended that his contract of employment be terminated. The local joint committee agreed with him and set aside the termination of employment and ordered his reinstatement.

Gauntlet Security appealed to the National Employment Council which found that the parties had terminated the contract of employment by mutual agreement. It held that the parties were entitled under s 2 of the Labour Relations (General Conditions of Employment) (Termination of Employment) Regulations 1985 (SI 371 /85) to terminate the contract of employment by mutual agreement in writing.

Hlabangani appealed to the Labour Relations Tribunal which did not accept that the appellant acted freely and voluntarily and concluded that his actions did not show that he was in agreement with the dismissal.

The decision of the Labour Relations Tribunal was set aside by the Supreme Court whose remarks were as follows; “A close look at the facts shows that Hlabangani did not suggest that he did not voluntarily put his signature on the document nor did he allege that he did not know that it contained terms of an agreement to have a mutual termination of the contract of employment. He did not in fact allege that he was dismissed from employment.

There was no unilateral act of repudiation of the contract of employment by Gauntlet Security. Hlabangani was in fact saying that while he represented to Gauntlet Security by conduct in signing the document that he was agreeable to a mutual termination of the contract of employment and led it to believe that indeed he intended what he had written on the document he in truth did not intend that his signature should have the effect it had. If that is the case, he is entirely to blame for having misled Gauntlet Security into believing what he intended it to believe that is to say that the contract of employment was being terminated by mutual agreement.

He must have known that he was not entitled to the payment of the money he received as terminal benefits without the contract of employment having been terminated in terms of agreement embodied in the document that he signed.

While some Collective Bargaining Agreements specifically outlines the procedures to be followed when parties choose to terminate the employment relationship by mutual agreement, I must emphasise that mutual in my view suggests a meeting of the minds, or commonality of purpose.

Where a dispute arises, you must be able to demonstrate on a balance of probabilities that your cancellation of employment relationship agreement constituted a mutual agreement to terminate the employment contract. In the absence of such evidence, employees usually claim that the employment contract was unilaterally terminated.

In another matter between CLARKE ENGINEERING TRANSPORT v REGIS H CHIKOZHO, Judgement No SC 104 /04, the Supreme Court remarked as follows: “Without words to that effect, the affixing of his signature to the letter cannot in my view be taken as a conclusive indication of the respondent`s concurrence with its contents. As contented for the respondent such signing was open to other interpretations. Indeed, it is argued for him that by signing the document, he could, simply, have been acknowledging receipt thereof.”

It is common practice for employees to accept a termination package offer arising out of termination by mutual agreement from an employer and leave the organisation. After sometime, employees may go to courts claiming either unfair dismissal or unfair retrenchment. Employers are warned that they should not get these types of termination confused.

As the stakes are often high when employment is terminated, employers are warned to formulate their mutual termination documents to make it clear that the termination is not a dismissal or retrenchment, record their consultations so as to make sure that they are able to prove to the courts what really was and was not said and above all avoid leaving termination strategies and processes to those not fully versed in labour law.

Disclaimer: Opinions expressed herein are solely those of the author.

Matthias Ruziwa is an experienced and progressing Strategic Human Resource Practitioner based in the Midlands Province, City of Kwekwe. You can contact Matthias at the following email address: [email protected] WhatsApp 0773 470 368.

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