A director of a quantity surveying firm was retrenched and not paid his due severance package. He referred a claim of unfair dismissal to the CCMA where the parties concluded an agreement that was clearly worded to end all disputes and claims, of whatever nature, between the parties. The respondent applied to the Labour Court claiming that the ex-director’s restraint of trade annexure was still in effect, and that he had violated it, despite the settlement agreement they had come to at the CCMA.

Wheelwright v CP de Leeuw Johannesburg (Pty) Ltd [2023] 5 BLLR 393 (LAC)

The appellant had signed a three-year fixed-term employment contract with his employer, the respondent, which included a restraint of trade annexure. This would restrain the appellant from offering his services in the field of quantity surveying, either as a director of a company or a proprietor of a business, or being connected with such a business in any way, within a 100km radius of the respondent’s offices, for three years. He was also restrained by this annexure from doing business with any clients of the respondent.

In 2021, the respondent made the decision to reduce the salaries of employees and directors due to a decline in revenue.

The appellant was not amenable to this salary reduction. A retrenchment package was negotiated and he was dismissed. He then referred a dispute to the CCMA as he felt he had been unfairly dismissed, and there was a discrepancy between the amount he received as severance pay and the amount he claimed was due to him.

Before commencement of the arbitration process, the parties settled on an agreement, which had been prepared by the commissioner, recording that the appellant would withdraw his claim and the respondent would pay the balance owed.

The wording of this agreement was very clearly “in full and final settlement of all and any claims which the parties may have against each other whether such claim arises from contract, delict, operation of law, equity fairness or otherwise”.

The appellant was then approached by a contractor for whom he had done work in his previous capacity as an employee of the respondent company. The prospective client had sent his query to the appellant’s work email address, to which the respondent replied that he was no longer with the company and a restraint of trade agreement was in place. The client specifically requested to work with the appellant personally. The appellant discussed the matter with him, successfully reassuring him that the restraint of trade agreement was no longer in effect, due to the settlement which had been reached, with wording to this exact effect.

The respondent then attempted to enforce the restraint clause by referring the matter to the Labour Court. The Labour Court held that the CCMA settlement agreement only had effect on the specific matters referred to the CCMA, namely the unfair dismissal claim and the amount of the severance pay, and that the restraint of trade agreement, therefore, remained untouched and in effect. The appellant disagreed, contending that the CCMA agreement had dissolved ALL possible disputes between the two parties, according to the exact wording of the agreement.

On appeal the Labour Appeal Court held that it was quite clear that the wording of the agreement extended beyond merely the issues referred to the CCMA. The Court also noted that the settlement agreement had been written by the parties themselves and their representatives who had chosen the words they felt would express the purpose each party had in mind. It is not the role of the court to interpret the meaning of a contract in some way that differs from the true meaning of the words, in response to its own feeling about the ethically preferable meaning, or according to what the parties should have or might have intended.

The wording of the agreement was not limited to any specific issues, and if the respondent had been intent upon continuing the restraint of trade agreement, the respondent should have expanded the exclusion to keep the restraint in effect.

The Labour Court had erroneously found that restraint of trade was somehow not included in an agreement literally worded: “any and all claims”.

The appeal was upheld with costs.

Issued by Labour Guide