Business executive who lied to get a $40‚000 sign-on bonus loses at Constitutional Court

A senior human resources executive who has spent years in the courts waging a legal challenge to a separation agreement he signed with his employer‚ has now lost in the Constitutional Court.

South Africa’s top court on Thursday handed down judgment in an application for leave to appeal from the Labour Appeal Court concerning the constitutional validity of a term in a mutual separation agreement providing for a waiver of Muyiwa Gbenga-Oluwatoye’s right of access to courts.

In June 2013‚ Gbenga-Oluwatoye negotiated an employment agreement with Reckitt Benckiser South Africa (Pty) Limited (Reckitt). He began his employment as Reckitt’s regional human resources manager on 22 July 2013.

 During negotiations‚ Gbenga-Oluwatoye told Reckitt he was working for Unilever. On this basis‚ Reckitt paid him a US$40‚000 sign-on bonus. But Gbenga-Oluwatoye had previously left Uniliver and was working at that stage for Standard Charted Bank.

 In February 2014 Reckitt discovered that his claim to it was false and suspended him. Following an investigation that confirmed the misrepresentation‚ Reckitt dismissed him on 3 March 2014.

Gbenga-Oluwatoye disputed the procedural fairness of his dismissal. He contended that Reckitt had violated his right to be heard because it did not afford him a pre-dismissal hearing. Reckitt denied that Gbenga-Oluwatoye had been dismissed without a hearing.

 But before the dispute was taken any further‚ the parties concluded a mutual separation agreement. The agreement was in full and final settlement of all claims between them. In the agreement‚ Gbenga-Oluwatoye unconditionally waived his right to approach the Commission for Conciliation‚ Mediation and Arbitration (CCMA) or any court for any relief against Reckitt in any dispute arising from his employment or from the separation agreement.

Despite this clause‚ Gbenga-Oluwatoye urgently approached the Labour Court. He challenged the lawfulness of the separation agreement. He alleged that Reckitt forced him to sign the agreement. Alternatively‚ he said that because the waiver provision restricted his right to seek judicial redress‚ it was against public policy and therefore invalid.

The Labour Court dismissed the application with costs. It noted that the application was not based on provisions of the Labour Relations Act but on the common law of contract. The court also found that the dismissal was not procedurally unfair. And it ruled the facts did not support Gbenga-Oluwatoye’s claim of duress. The court actually found the separation agreement to be a valid compromise.

Aggrieved by this decision‚ Gbenga-Oluwatoye first applied directly to the Constitutional Court. The court dismissed his application because it was not in the interests of justice to hear it at that stage. He then appealed to the Labour Appeal Court. That court endorsed the Labour Court’s findings. It found that this sort of agreement should be treated the same as any other agreement between an employee and an employer. So it could be void‚ should it be shown that improper influence was present. Gbenga-Oluwatoye‚ however‚ failed to show this.

On the alleged infringement of his constitutional rights‚ the Labour Appeal Court held that his bargaining power at managerial level was such that he was aware of the consequences of the separation agreement‚ and its limitation on his rights was reasonable.

 Then Gbenga-Oluwatoye approached the Constitutional Court again. He maintained that his employment contract expressly or tacitly included the right to a pre-dismissal hearing. More so‚ he argued that South African law recognises an implied term in all contracts of employment to the effect that employees are entitled to a pre-dismissal hearing. Alternatively‚ if this court found that there was no right to a pre-dismissal hearing‚ it ought to develop the common law to include it.

Reckitt asked that the case be dismissed with costs. They supported the reasoning of the Labour Appeal Court.

In a unanimous judgment‚ written by Moseneke DCJ and Cameron J‚ the Constitutional Court found on Thursday that it had jurisdiction to decide the application because it raises the right to access courts‚ and the development of the common law in accordance with the Bill of Rights.

 The ConCourt considered all the grounds advanced by Gbenga-Oluwatoye to be without merit‚ except for the lawfulness of the waiver provision which it felt was the only ground of appeal that had prospects of success.

 However‚ the court noted that Gbenga-Oluwatoye was a senior manager with prior work experience at a senior level. Nothing indicated that his bargaining power was unequal or that he did not understand the waiver provision.

 The Constitutional Court noted that Gbenga-Oluwatoye had confessed that he had no defence to the charge of misrepresentation. It was after this that he had entered into the separation agreement to put the dispute to bed.

 He did so knowingly and with his eyes open to his own future interests‚ the court found. The public policy considerations may have been different if he had agreed to abjure recourse to the courts in future disputes. But he had agreed to settle an existing dispute. That was permissible‚ the court said. He agreed to part ways with Reckitt on terms that were final‚ and that protected him from further action by his employer – including the possibility of a disciplinary process that could wound his career irremediably.

The court held that it would be in line with public policy to enforce agreements of this sort. The waiver provision was found to be constitutionally compliant.

The court also noted that even if the clause excluding access to courts was on its own invalid and unenforceable‚ Gbenga-Oluwatoye’s case would still fail because he concluded an enforceable agreement that finally settled his dispute with his employer.