Matyolo-Dube, who had been secretary for eight years, was fired in February this year after being found guilty of nepotism and financial misconduct.
But she challenged her dismissal at the Commission for Conciliation, Mediation and Arbitration, where the matter was to be heard earlier this month.
Before the arbitration proceedings started on September 6, however, the parties agreed on an out-of-court settlement that would see Matyolo-Dube R1.3-million richer and the case disappear.
Matyolo-Dube had earlier warned that she was "not going down alone", but this week Parliament was mum on whether the settlement was a bid to prevent dirt on other parliamentary members from coming out.
Luzuko Jacobs, the Parliamentary speaker said Parliament had settled even though it was "confident about this case", as there was no guarantee it would win.
He said there were a number of reasons for opting to pay out Matyolo-Dube, including that the dispute could take years to resolve and that it would ensure that her dismissal stood.
Matyolo-Dube, who had also been Parliament's acting chief legal adviser since 2006, had been placed on special leave in October 2008 to allow auditors KPMG to investigate allegations that she had hired and promoted family and friends and irregularly awarded parliamentary contracts to those close to her.
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