Fair work dispute settlements

Occasionally a party may reach a settlement of an unfair dismissal case at the Fair Work Commission conciliation conference but then change his or her (or its in the case of a corporation) mind and seek to walk away from the settlement. This is rarely possible, thus

 

“Respondent’s Submissions

[30] The Respondent submitted that the Applicant is barred from making an Unfair Dismissal

claim as he signed with full understanding and knowledge, a settlement agreement that released

the Respondent from any liability past, present or future from all claims, suits, demands, action

or proceedings arising out or connected with the Applicant’s employment with the Respondent

including but not limited to the cessation of employment.

[31] The Respondent disputes the Applicant’s contention that this agreement should be

voided as he signed it under financial duress noting that at no time did the Respondent pressure,

threaten or misrepresent information to the Applicant.

[32] In closing oral submissions that Respondent submitted that the Applicant has argued

that he should not be bound as he was under financial duress, and has also claimed he did not

read the settlement document as he thought it was a mutual separation document.

[33] The Respondent submitted the Applicant accepted he declined the initial settlement

offer, and only chose to accept the payment once it was raised to a level he would accept.

[34] The Respondent submitted that whether Ms Song’s evidence is accepted about what the

sum was being paid for, or the Applicant’s version, it remains the case that the Applicant signed

an agreement that would prevent him from lodging this unfair dismissal claim.

[35] The Respondent submitted that the settlement letter document written by the Applicant

himself, makes clear that he signed pending payment of $10,500 and payment of outstanding

leave and hours accumulated totalling $4,513.55. The Respondent contends the Terms of

Settlement were knowingly and properly executed.

Applicant’s Submissions

[36] The Applicant submitted that the settlement letter was not in reference to any other

document. The Applicant said the Terms of Settlement were apparently drafted on 7 December,

and despite discussions in the weeks earlier negotiations only happened on 7 December.

[37] The Applicant submitted he denied signing the Terms of Settlement and it was only

brought up on 7 December. The Applicant submitted that Ms Song was rushed, and he was

offered $10,500 on 5 December, and the Ms Song was aware of his financial position and used

it to her advantage. The Applicant submitted the Terms of Settlement should be set aside to

deal with the real issue which is about unpaid overtime.

[2023] FWC 569

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Consideration of Jurisdictional Objection

[38] The Respondent submitted that the application is barred by the terms of a binding

agreement between the parties. Relevantly to this matter s.587 provides:

“587 Dismissing applications

(1) Without limiting when the FWC may dismiss an application, the FWC may

dismiss an application if:

(a) the application is not made in accordance with this Act; or

(b) the application is frivolous or vexatious; or

(c) the application has no reasonable prospects of success.

Note: For another power of the FWC to dismiss an application for a remedy for unfair

dismissal made under Division 5 of Part 3 2, see section 399A.

(2) Despite paragraphs (1)(b) and (c), the FWC must not dismiss an application

under section 365 or 773 on the ground that the application:

(a) is frivolous or vexatious; or

(b) has no reasonable prospects of success.

(3) The FWC may dismiss an application:

(a) on its own initiative; or

(b) on application.”

[39] The High Court has provided clarity as to circumstances when a binding contract will

exist, as follows:

“Where parties who have been in negotiation reach agreement upon terms of a contractual

nature and also agree that the matter of their negotiation shall be dealt with by a formal

contract, the case may belong to any of three cases. It may be one in which the parties

have reached finality in arranging all the terms of their bargain and intend to be

immediately bound to the performance of those terms, but at the same time propose to

have the terms restated in a form which will be fuller or more precise but not different

in effect. Or, secondly, it may be a case in which the parties have completely agreed

upon all the terms of their bargain and intend no departure from or addition to that which

their agreed terms express or imply, but nevertheless have made performance of one or

more of the terms conditional upon the execution of a formal document. Or, thirdly, the

case may be one in which the intention of the parties is not to make a concluded bargain

at all, unless and until they execute a formal contract. In each of the first two cases there

[2023] FWC 569

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is a binding contract: in the first case a contract binding the parties at once to perform

the agreed terms whether the contemplated formal document comes into existence or

not, and to join (if they have so agreed) in settling and executing the formal document;

and in the second case a contract binding the parties to join in bringing the formal

contract into existence and then to carry it into execution.”6

[40] The Federal Court has considered that the Commission has the power to dismiss an

unfair dismissal application under s.587 where a binding settlement agreement exists. That is

because the binding settlement agreement extinguishes the pre-existing cause of action and the

continued pursuit of the application based on such cause of action is clearly capable of being

considered to be frivolous or vexatious or without reasonable prospects of success.7

[41] I am satisfied that a binding settlement agreement was reached between the parties based

on the evidence of Ms Song and Mr Donnelly, which indicates that the parties negotiated and

agreed on a resolution to the Applicant’s overtime dispute. It appears an offer was made in

writing by the Respondent, noting a portion of the payment was written on the Applicant’s

notebook but was signed by Ms Song, all of which was accepted in writing by the Applicant.

[42] This finding is further supported by the conduct of the Applicant who in his own witness

statement provided that he agreed to terms of settlement and had signed the deed without any

pressure, threats or misrepresentations made by the Respondent. Further, the Applicant had

stayed at the meeting venue with Ms Song and Mr Donnelly for several hours after signing the

deed of settlement where the parties ordered drinks and had dinner together, at which on the

evidence at no time did the Applicant express any discontent with the finalisation of the deed

of settlement.

[43] I have had regard to the Applicant’s assertion that he did not know the document he

signed was a deed of settlement and that he felt pressured to sign, however it notable that his

written statement did not make any reference to discussions that had been occurring prior to 7

December 2022. I am inclined to prefer the evidence of Ms Song, that the Applicant and herself

went through the terms of the Deed of Settlement before it was signed and witnessed, and that

the Applicant understood what he was signing.

[44] The Applicant did not contest that he did not sign the signature page of the Terms of

Settlement.8

He submitted it was not attached to the Terms of Settlement document itself. I

find this less plausible than the evidence of Ms Song that the document was gone through and

then signed by both parties and witnessed by Mr Donnelly. The version as provided by the

Respondent that the Terms of Settlements was agreed, as well as the other signed settlement

letter setting out the additional payment of $4,513.55 is more likely to be true than the

Applicant’s version which appears to be that he signed the signature page of the Terms of

Settlement document, and the settlement letter without reading and understanding the Terms of

Settlement.

[45] I am not satisfied that he did not read the Terms of Settlement, or that he entered the

agreement under duress, or was coerced into signing the Deed of Settlement. I am satisfied that

the Applicant is bound by the Agreement made.

[2023] FWC 569

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[46] As I have made that determination, the application is dismissed in accordance with

section 587 of the Act on the basis that it is frivolous or vexatious and has no reasonable

prospects of success.”

 

Extracts from  Mackenzie v Luban Homes Pty Ltd [2023] FWC 569 delivered 8 March 2023 per Simpson C