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There is a practice in the workplace, other than misconduct, operational requirements and incapacity, which ends the employment relationship. This practice is called a mutual termination agreement which is also known as a settlement agreement.

Employers often do not want to go through the inconvenience of a disciplinary process with their employees, especially executives, because it is disruptive to their businesses. Instead, many employers prefer negotiating a deal with the employee. One of the advantages of this approach is that it can be more reassuring when communicating with customers and staff. Of course, the employee would obviously have to be amenable to a negotiated exit.

This is an acceptable practice by the CCMA and the Labour Court.When concluding a mutual termination agreement employers should adhere to certain general principles in order to avoid future repercussions. The agreement should be in written form. It should clearly state that it is in full and final settlement of all obligations between both the involved parties. It should also be signed by both parties and witnessed. The agreement should be explained to the employee. The employer’s failure to explain to the employee the contents of an agreement terminating the employment relationship by mutual consent, will render the agreement null and void.Another major advantage of a mutual separation is this: provided the agreement contains a full and final settlement clause in which the employee waives any and all claims that he or she has or may be entitled to against the employer, the employer is protected from the employee taking any action in respect of the termination of employment. For the employee, it allows for a graceful exit in a situation that would otherwise most likely result in his or her name being tarnished.

Example uses of this document:

There is a practice in the workplace, other than misconduct, operational requirements and incapacity, which ends the employment relationship.

Agreement contents

• Termination date
• Liabilities
• Property
• Prior Agreements
• Confidentiality

An unconditional waiver of the employee’s right to seek judicial redress through the Commission for Conciliation, Mediation and Arbitration (“the CCMA”) and the Courts.

Draftsman

This document was written for Agreements.org by a Senior Attorney (Admitted in the High Court) with more than 18 years’ experience. It complies with current South African law.