A settlement agreement is a written agreement entered into between parties in full and final settlement of a valid dispute referred to the CCMA or Bargaining Council.  The effect of such an agreement is that the dispute between the parties is resolved and such an agreement may be entered into at any stage during the CCMA or Bargaining Council proceedings.


In the event that a party to the settlement agreement fails to comply, the party who wishes to enforce the agreement may apply to the CCMA to have the settlement agreement made an arbitration award. However, this will not apply to settlement agreements relating to interest disputes and those concerning essential or maintenance services.  The arbitration award may then be certified by the CCMA and enforced.  The applicant who wishes to enforce the award may request the sheriff to execute if the initial settlement agreement (now arbitration award) was for the payment of money.  Alternatively, in the case of an arbitration award for the performance of an act, other than for the payment of money, the applicant will be required to institute contempt of court proceedings in the Labour Court.


In Ulster v Standard Bank of SA Ltd (2013) 34 ILJ 2343 (LC), the employee after concluding a settlement agreement at the CCMA, approached the Labour Court for an order setting aside the settlement agreement on the basis that she had not entered into it willingly and was coerced by her union’s legal representative.  The Labour Court confirmed that a party who wishes to have the settlement agreement set aside will need to prove, on a balance of probabilities and in terms of our common law of contract, the allegation of duress.  In this case, the employee was a bank manager with 30 years of experience.  In addition, before signing the agreement, the employee further confirmed to the commissioner that she understood and accepted the employer’s proposal.  On these grounds the Labour Court found the employee to be bound by the agreement.


This case confirms the position that settlement agreements are legally binding in nature and to prevent a situation as set out above, a commissioner should assist parties by carefully explaining the terms, as well as the consequences of failing to comply with the settlement agreement.  Parties are also advised to be cautious and to ensure that they fully understand the terms of the agreement they are signing.


Article by: Chanel Snyman

CEO Provincial Manager – Port Elizabeth