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Out of court settlements on the rise

Article by lvan lsraelstam, Chief Executive of Labour Law Management Consulting

Negotiation and labour law skills are the key

The lack of legal understanding amongst employers is so commonplace that the number of disputes at CCMA would be far greater but for the reluctance on the part of many employees to take their cases further. That is, many employees, especially those at higher levels, prefer to ignore unfair treatment at the hands of employers.

As a result the employee or executive gives up and finds another job. They forget that, by doing so, they have allowed unfair action to be swept under the carpet and may have sacrificed a number of years of service. As a result of the employee’s reluctance to take up the matter, many types of unfairness are perpetuated. These include, amongst others:

  • sexual harassment
  • forced resignations
  • unfair retrenchments
  • firing for misconduct
  • poor performance terminations
  • scapegoating
  • nepotism
  • favouritism
  • victimisation
  • making room for ‘buddies’ or relatives
  • cutting of pay
  • reduction or removal of benefits and allowances
  • verbal abuse
  • threats, and
  • assault.

Despite the above types of mistreatment, many employees either resign, drop the matter or accept a small settlement to keep quiet. Strangely enough this capitulation occurs most frequently in the R20 000 to R100 000 per month remuneration bracket. This is possible because employees at this level are not unionised or do not want to tarnish their reputations by taking the employer to the CCMA.

However, most employers who settle do so because they fear the CCMA, want to avoid hassles, time wasting and costs, do not want their name dragged through the mud or are unsure of the strength of their case.

Employees often accept a settlement because they:

  • are nervous about the possibility of having to represent themselves at the CCMA
  • want to avoid confrontation
  • are concerned about their reputations
  • want a quick settlement, and
  • fear the cost of litigation.

Where there is a financial settlement the employee usually gets the short end of the stick by accepting a one-month to three-month settlement package. However, it is very often in the interests of both the employee and the employer that a fair settlement is reached. The party that wins the settlement negotiations will be the one who:

  • has the wherewithal to provide proof of their case
  • best understands labour law, or
  • has access to a labour law expert with strong negotiation skills.

Should the employee or the employer want to achieve a favourable out of court settlement the above three ingredients are available in the market. For example, a reputable labour consultant will not only be able to negotiate a favourable settlement but should be able to do so at a reasonable hourly rate or contingency fee. A favourable settlement for an employer is up to three months, but a favourable settlement for an employee would be six to 12 months remuneration.

Labour Law Management Consulting is a proud member of the National Small Business Chamber (NSBC).