Mutual separation agreements are legal and binding in South Africa. They can be entered into before or after a disciplinary enquiry. A mutual separation agreement is a waiver of rights by both parties to enable a “soft exit” of the employee. This may enable the employee to exit the company by having their reputation in place. By entering into such an agreement, an employee would be neither admitting nor denying any liability in the alleged misconduct that they are accused of.
Binding on all parties
These agreements are in full and final settlement. This means that an employee waives their rights in terms of approaching any courts, tribunals such as the CCMA etc regarding any alleged impropriety that stemmed from the employment relationship. The company as well waives any rights or claims against such an employee.
Benefits of a mutual separation agreement
Some of the benefits of such an agreement for a company is that an exit is negotiated without having to go through a cumbersome disciplinary enquiry, incapacity hearings as well as any retrenchment processes. This is especially true, where senior level employees are concerned. This way operations are not disrupted. For the employee, this means that they have not been dismissed, but rather have chosen to sever ties with the company on “good terms”.
The terms of such agreements are negotiated between the company and the employee. Once the negotiations are final and the agreement has been signed, the agreement will be in effect.
Disadvantages of a mutual separation agreement
The fact that once signed, the mutual separation is binding, can pose a disadvantage especially if the employee was not assisted by an attorney. This is due to the fact that an employee will often settle for unfavourable terms believing that it was the only option they had. It is important that before a mutual separation agreement is concluded, the employee has sought the necessary assistance and is fully aware of their rights. Unfortunately, once the agreement has been signed, it is too late for the employee to renegotiate new settlement terms.
Know what you are signing
It is important for an employee to know what they are signing and to ensure that they negotiate and get the best terms. Once a mutual separation agreement has been signed, it is done in full and final settlement and is binding on all parties.
For more information, contact Rajaram Mvulane Attorneys at info@rajarammvulane.co.za
Article Disclaimer
This article is not intended to provide legal advice. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).
