Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Limited and Another (CCT41/16) [2016] ZACC 33; (2016) 37 ILJ 2723 (CC); 2016 (12) BCLR 1515 (CC); [2017] 1 BLLR 1 (CC) (15 September 2016)

80 Reportability

Labour Law

Brief Summary

Employment Law — Right to access to courts — Settlement agreement — Waiver of right to approach CCMA or Labour Court — Applicant, a former employee of Reckitt Benckiser, challenged the validity of a separation agreement that included a clause waiving his right to judicial redress following his dismissal for misrepresentation — The Labour Appeal Court upheld the separation agreement, finding it lawful and not contrary to public policy — Constitutional Court dismissed the application for leave to appeal, concluding that the applicant had waived his right to a pre-dismissal hearing and that the separation agreement was a valid full and final settlement of claims.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an application for leave to appeal to the Constitutional Court against an order of the Labour Appeal Court, which had dismissed an appeal from the Labour Court. The Constitutional Court was also asked to condone a one-day delay in filing the application for leave to appeal.

The applicant was Mr Muyiwa Gbenga-Oluwatoye, a former employee of the first respondent, Reckitt Benckiser South Africa (Pty) Limited. The second respondent, Mr Nadeem Baig N.O., Reckitt’s regional human resources director, was joined by the applicant to the proceedings. Both respondents opposed the application.

The dispute arose from the termination of the applicant’s employment and the consequences of a later settlement (mutual separation) agreement. Although the applicant’s initial complaint included an asserted entitlement to a pre-dismissal hearing under the common law of contract (either expressly, tacitly, or by implied term), the litigation came to focus centrally on whether the parties’ settlement agreement—particularly a clause waiving recourse to dispute-resolution fora and courts—was lawful and enforceable in light of constitutional norms, including the right of access to courts.

2. Material Facts

The applicant concluded a contract of employment with Reckitt on 16 June 2013 and commenced employment as Reckitt’s regional human resources director on 22 July 2013. During February 2014, Reckitt initiated an investigation into alleged misrepresentation by the applicant concerning his qualifications and employment history, which resulted in the applicant’s suspension.

A central factual premise, accepted by the courts below and relied upon in the Constitutional Court’s analysis, was that the applicant had misrepresented his then current employer during employment negotiations. Reckitt contended that he identified Unilever as his current employer when, in truth, it was Standard Chartered Bank. Reckitt regarded the misrepresentation as material because it paid the applicant a sign-on bonus of US$40 000 on that basis.

On 3 March 2014, the applicant’s employment was terminated for misrepresentation. The applicant placed procedural fairness in issue, alleging that there was no disciplinary hearing, and contending this infringed a right to be heard that he asserted arose from clause 10.1 of his employment contract (expressly or by implication), or from the common law of contract more generally. The respondents disputed that he had not been afforded a pre-dismissal hearing.

A further and decisive development was that the parties entered into a “Settlement Agreement” (also referred to as a mutual separation agreement) regulating their separation and future relationship. The applicant initially alleged he had been coerced into signing it (duress), but before the Constitutional Court he appeared to have abandoned the duress claim. The settlement included clause 3.4.2, by which the applicant voluntarily and unconditionally waived the right to approach the CCMA, the Labour Court, or any other court for relief against Reckitt arising from his employment, resignation, or the agreement. Clause 4.1 recorded that the agreement was in full and final settlement of all claims between the parties, with an exception in clause 4.2 allowing Reckitt to sue in the event of non-repayment of the sign-on bonus.

In the Labour Court, the applicant pursued an urgent application for declaratory relief. The Labour Court dismissed the application with costs, including rejecting the claim that the settlement agreement was signed under duress and holding that the waiver clause amounted to an expression of full and final settlement. The Labour Appeal Court dismissed the appeal, holding that the settlement agreement superseded the employment contract and that the waiver clause was not contrary to public policy, applying the approach in Barkhuizen. It also noted that disputes of fact existed on duress and that the applicant had proceeded by motion without seeking referral to oral evidence or trial.

3. Legal Issues

The Constitutional Court identified that the application raised questions whether the applicant’s employment contract provided (expressly or tacitly) for a right to a pre-dismissal hearing under the common law of contract; whether the common law tacitly provides for such a right in all contractual employment relationships; and whether the settlement agreement between the parties was lawful, particularly the waiver of recourse to the CCMA and courts.

In the Constitutional Court, the applicant’s case effectively stood or fell on two issues. The first concerned the asserted common-law right to a pre-dismissal hearing and, if absent, whether the common law should be developed. The second concerned whether clause 3.4.2 of the settlement agreement was contrary to constitutional principles and public policy, given the constitutional right of access to courts in section 34 and the applicant’s reliance on sections 4 and 5 of the Labour Relations Act in connection with fair labour practices under section 23 of the Constitution.

The dispute therefore engaged a combination of law (public policy and the constitutional control of contractual terms; the relevance of the Barkhuizen test; the legal effect of settlement agreements) and the application of law to fact (whether the waiver clause, in the context of the agreement and the parties’ circumstances, should be enforced). The Court treated the decisive question as whether enforcing the waiver and settlement in the circumstances would be contrary to public policy.

4. Court’s Reasoning

The Constitutional Court accepted that the matter engaged its jurisdiction because it implicated the right of access to courts and potentially the development of the common law in line with the Bill of Rights. It nevertheless concluded that none of the grounds advanced enjoyed prospects of success and that leave to appeal should be refused.

A key step in the Court’s reasoning was its treatment of the settlement agreement as dispositive. The Court held that, given its conclusion on the settlement agreement, the applicant’s complaint about a pre-dismissal hearing did not arise for determination in the leave application. The Labour Appeal Court had similarly treated the settlement agreement as superseding the employment contract, rendering it unnecessary to decide the asserted contractual entitlement to a hearing.

On the public policy question, the Court framed the issue as whether clause 3.4.2—waiving recourse to the CCMA, the Labour Court, or any other court—was against public policy. It located this enquiry within the approach identified in Barkhuizen v Napier, namely that constitutional challenges to contractual terms raise the question whether the provision is contrary to public policy. The Court noted that Barkhuizen dealt with a contractual time-limitation clause that could restrict access to courts, and it highlighted Barkhuizen’s warning against clauses so unreasonable that they make judicial redress impractical. At the same time, the Court expressed reservations about whether Barkhuizen was directly “on point” for the present scenario and preferred to express no view on that.

The Court then emphasised the countervailing public-policy consideration: the importance of enforcing agreements solemnly concluded by parties who operate from a position of approximate equality of bargaining power, and the public and private interests served by permitting parties to settle disputes on mutually agreeable terms. In this assessment, the Court considered the Labour Appeal Court’s emphasis on the parties’ relative positions and bargaining power to have persuasive force in the context of this case.

Applying those considerations to the facts, the Court placed weight on the context in which the settlement was concluded. It described the applicant as having engaged in material deceit and misrepresentation, and noted his own acknowledgment that he had no defence when confronted with the misrepresentation in his curriculum vitae. The settlement was understood as resolving a present and existing dispute, not as a blanket waiver of access to courts for unknown future disputes. The Court reasoned that the applicant elected to part ways with Reckitt on terms bringing finality, and that the settlement protected him from further action by his employer, including a disciplinary process that might have harmed his career. The waiver of recourse to courts and tribunals was treated as part of the agreed finality of the settlement.

The Court concluded that the public, as well as the courts, have a strong interest in enforcing such full and final settlement agreements. It held that parties should not lightly be released from undertakings seriously and willingly embraced, particularly where, as characterised by the Court, the agreement was for the benefit of the party seeking to escape the consequences of his own conduct.

The Court added that even if the clause excluding access to courts were viewed in isolation as invalid and unenforceable, the applicant would still fail because he concluded an enforceable agreement that finally settled the dispute with his employer. On this basis, the Court held that the application lacked prospects of success and should be dismissed.

5. Outcome and Relief

Condonation for the late filing of the application for leave to appeal was granted, the delay having been minimal and adequately explained.

Leave to appeal was refused on the basis that the grounds of appeal bore no prospects of success, given the enforceability and dispositive effect of the settlement agreement.

The application for leave to appeal was refused with costs.

Cases Cited

Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC).

Boxer Superstores Mthatha v Mbenya [2007] ZASCA 79; [2007] 8 BLLR 693 (SCA).

Old Mutual Life Assurance Co SA Ltd v Gumbi [2007] ZASCA 52; [2007] 4 All SA 866 (SCA).

South African Maritime Safety Authority v McKenzie [2010] ZASCA 2; [2010] 3 All SA 1 (SCA).

Transman (Pty) Ltd v Dick and Another [2009] ZASCA 38; [2009] 3 All SA 183 (SCA).

Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd and Another unreported judgment of the Labour Court, Case No. J580/14 (12 March 2014).

Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd and Another [2016] ZALAC 4; (2016) 37 ILJ 902 (LAC).

Legislation Cited

Constitution of the Republic of South Africa, 1996 (sections 23 and 34).

Labour Relations Act 66 of 1995 (sections 4 and 5).

Rules of Court Cited

No specific rules of court were cited in the judgment.

Held

The Constitutional Court held that, although its jurisdiction was engaged because the matter implicated the right of access to courts and the development of the common law, the application for leave to appeal had no prospects of success because the parties had concluded a settlement agreement in full and final settlement of all claims arising from the employment relationship.

It held that enforcing the settlement agreement, including the waiver of recourse to the CCMA, the Labour Court, or any other court in relation to the settled dispute, was not contrary to public policy in the circumstances described. The applicant was held bound to the agreement and could not be lightly released from it. Condonation for the late filing was granted, but leave to appeal was refused with costs.

LEGAL PRINCIPLES

The judgment applied the principle that constitutional challenges to contractual terms are determined through an enquiry into public policy, as articulated in Barkhuizen v Napier, while recognising that contractual terms may be unenforceable if they are so unreasonable as to make access to judicial redress impractical.

It also applied the principle that public policy strongly favours giving effect to settlement agreements solemnly concluded to resolve existing disputes, particularly where parties contract from a position of approximate equality of bargaining power and with adequate understanding of the agreement’s consequences.

The judgment further applied the principle that, where a dispute has been resolved by an enforceable full and final settlement, a party will not readily be released from the undertaking, and the settlement may supersede or render unnecessary the determination of antecedent disputes about contractual rights arising from the original employment contract.