Unfair dismissal settlement agreements; when are they binding?

It is quite common for there to be a dispute between an applicant to an unfair dismissal claim and the former employer to have a dispute about whether the matter was settle by an agreement at a conciliation conference. This extract from a recent case sets out the legal principles.

“Application for an unfair dismissal remedy – matter settled at conciliation – request to reopen – whether a binding agreement existed.

[1] On 31 December 2021 Ms Kellin Behrendorff (Applicant) made an application to the Fair Work Commission (Commission) seeking a remedy for unfair dismissal in relation to the termination of her employment from JB HiFi (Respondent).

[2] The application was subject to conciliation before a staff conciliator on 16 February 2022 where it apparently settled. As was agreed at the conciliation JB HiFi drafted a Settlement Agreement to reflect the agreement reached and sent it to Ms Behrendorff on 17 February 2022. Ms Behrendorff replied that day to JB HiFi and said “I don’t agree with the below. It was never discussed with fair work on being apart of the contract. I won’t be signing it until it is removed.” (sic) On a request for clarification of what she objected to in the “standard settlement agreement”. Ms Behrendorff indicated that she objected to the inclusion of:

The part about never working for the company again. I didn’t agree to sign anything like that. And I won’t be, even if I am not working for the company again.

[3] JB HiFi advised Ms Behrendorff that the clause in question was a standard part of JB’s settlement agreement and that they were not prepared to remove the restraint clause.

[4] On 24 February 2022 Ms Behrendorff wrote to the staff conciliator and said:

Hi [conciliator]

What happens now that I’ve not agreed to sign that contract that JB have presented me and they refuse to take out the part I don’t agree/ did not agree with while the meeting took place?

I Will not be signing that contract with as little at 2K compensation to now work a lesser paying job at a lower skill level without weekly income.

Thanks

Kellin

[5] On 28 February 2022 and 9 March 2022 Ms Behrendorff followed this up with further queries to the staff conciliator.

[6] In between these dates, on 3 March 2022, Ms Behrendorff also emailed the Commission at a general Commission email address and said:

Hi there,

This issue is still not resolved. I’ve contacted [staff conciliator] several times with no reply at all.

Our mediation was weeks ago and there is still no outcome due to both parties not coming to an agreement.

Please advise.

Thanks

Kellin

[7] On 9 March 2022 Ms Behrendorff again contacted the Commission seeking a response to her earlier email.

[8] Ms Behrendorff’s email of 9 March 2022 was referred to my chambers. It is unclear why her earlier email not been referred to my chambers for action.

[9] As a result of the request of Ms Behrendorff on 10 March 2022 my chambers listed the matter for a mention on 17 March 2022 and advised the parties accordingly. Ms Behrendorff advised her unavailability for that day. My chambers sought from Ms Behrendorff her availability but she advised she worked Monday to Friday “so it’s just not feasible” (presumably to participate in a mention on the matter).

[10] Following receipt of that email on 10 March 2022 my chambers sought written advice from JB HiFi as to whether it considered a binding settlement agreement had been reached arising from conciliation. A follow-up to that email resulted in a response from JB HiFi on 21 March 2022 in which it indicated it considered a binding settlement agreement had been reached, it acknowledged that Ms Behrendorff had refused to sign the settlement agreement as she did not agree with the restraint clause even though she had indicated she did not wish to work for JB HiFi again and that, since the conciliation, Ms Behrendorff had breached confidentiality.

[11] Ms Behrendorff sent an unsolicited reply on 10 March 2022 in which she said:

I do not consider that any agreement was reached. I have made it clear that I am not accepting the contract they have put before me, therefore the matter is not resolved.

[12] On 22 March 2022, in response to JB HiFi’s advice of 21 March 2022, Ms Behrendorff sent a further email to my chambers in which she said she had never said she did not want to work for JB HiFi, that she was “sick of JB HiFi and their lies” and she did not breach confidentiality.

[13] On 22 March 2022 my chambers sought submissions and a witness statement from Ms Behrendorff as to what she said had occurred of the conciliation along with copies of any relevant correspondence. Her reply was requested by 28 March 2022. In reply Ms Behrendorff sent two emails to my chambers on 22 March 2022. The first of those emails read:

Are you serious right now? Please find attached all of times I emailed [conciliator] that you claim you have no record of.

I have also attached my emails to Kris letting her know that I am not signing the contract because she added a clause that we did not mention in the mediation and I do not agree with it. You can listen to the mediation and if you can tell me where this was agreed upon I will gladly admit it was resolved, but I did NOT and will not agree to sign the paper work because of Jb Hifi adding something to it that I didn’t agree upon.

How disgusting and honestly not surprising that they would add this and try to get fair work to agree with them on it.

Thanks.

[14] In her second email Ms Behrendorff said:

I agreed to take my posts down if jb changed my paperwork to resigned. Not change my paperwork to agree to never work for the company again despite if I want to or not. Jb has failed to stick to their agreement, not me.

[15] Attached to this correspondence were the emails between Ms Behrendorff and JB HiFi following conciliation (set out above) and correspondence to the staff conciliator (also set out above).

[16] The Commission did not receive any further submissions or a witness statement from Ms Behrendorff in relation to the conciliation. As a result, on 31 March 2022 my chambers wrote to JB HiFi in which we said:

Dear Pei Chen,

In response to a request for submissions and evidence as to what took place at conciliation Ms Behrendorff has provided:

  1. An email to the Commission of 22 March 2022 at 3:38pm (copied to you)
  2. An email to the Commission of 22 March 2022 at 4:46pm (copied to you)
  3. An email to the Commission of 23 March 2022 at 10.33am which has within it an email chain between Ms Behrendorff and Ms Dishon of JB HiFi in which she apparently indicates an unwillingness to sign the terms of settlement because of the restraint clause
  4. An email to the Commission of 23 March 2022 at 10:28am which has within it emails she sent to [the conciliator]…of 24 February 2022 and 28 February 2022
  5. An email to the Commission of 23 March 2022 at 10:29am which has within it emails she sent to [the conciliator]…of 24 February 2022, 28 February 2022 and 9 March 2022.

Commissioner Bissett accepts this as the submissions and evidence of Ms Behrendorff in relation to her claim that no agreement was reached between the parties at conciliation.

Commissioner Bissett now requests that JB HiFi file with the Commission and serve on Mr Ms Behrendorff submissions and evidence on which it seeks to rely in support of its claim that a binding settlement agreement was reached between the parties. This material should be filed with the Commission by 4.00pm Thursday 14 April 2022.

Following receipt of this material the Commissioner will consider the next appropriate steps with the application.

[17] On 12 April 2022 the Commission received a written submission with 2 attachments from JB HiFi in support of its position that a binding settlement agreement had been reached.

[18] On 12 April 2022, following receipt of submissions from JB HiFi Ms Behrendorff sent a further email to the Commission in which she said:

Hi Pei and Associate,

No verbal agreement was reached to agree to never work for the company again which is why no paper work was or will not be signed. This term was not spoken about during the mediation.

Thanks

kellin

[19] On receipt of all of the material referred to above my chambers again attempted to set a date to hear from Ms Behrendorff and JB HiFi as to whether a binding settlement agreement was reached. The first date proposed was not suitable to Ms Behrendorff. She also indicated that she was not prepared to have the matter decided on the basis of the written material received “if it is decided that a verbal agreement was reached…” On the basis of Ms Behrendorff’s availability a mention was set for Friday 22 April 2022 to determine a hearing date or how, otherwise, the matter might be decided.

[20] Following a discussion with the parties of the need for the Commissioner to take into account both parties’ submissions and evidence prior to making a decision JB HiFi indicated the Commission should make a decision on the basis of the written material provided. Ms Behrendorff was given until Tuesday 26 April 2022 to advise if she wished to have a hearing on the matter. Later that day the Commission received an email from Ms Behrendorff in which she said:

I don’t know why I have to keep going over this/ the agreement was Jb Hifi pay me 2 weeks wage and I would sign their contract stating I will remove all tik toks and social media comments and posts about jb Hifi.

I was then sent a contract to sign that I did not agree with because they added a clause that was not apart of the agreement.

[The conciliator] then just stopped replying leaving the matter unresolved.

What’s the point in fair work helping to reach an agreement if jb can put forward whatever they want anyway?

This whole process has been pointless and fair work have been no help what so ever in helping me being unfairly dismissed by this toxic company.

[21] I have taken from this correspondence (and the lack of any further correspondence) that Ms Behrendorff does not wish to have a hearing or give evidence as to whether a binding settlement agreement has been reached between the parties in conciliation. On this basis I will decide the matter on the basis of the submissions made.

Consideration

[22] I accept that, at the conciliation that occurred on 15 February 2022, an agreement was reached between Ms Behrendorff and JB HiFi to settle Ms Behrendorff’s application for remedy for unfair dismissal. It was agreed that JB HiFi would provide the settlement agreement in writing to Ms Behrendorff.

[23] The undisputed terms, based on the settlement agreement filed by JB HiFi, are that:

  1. JB HiFi would pay Ms Behrendorff an amount of $2,137.76 (gross)
  2. The termination would be designated as an employee resignation
  3. Ms Behrendorff would, on signing the agreement, discontinue proceedings, delete all social media posts mentioning JB HiFi, comply with the release clause, confidential information clause, non-disparagement clause, restraint clause, confidentiality clause and comply with her on-going contractual obligations.

[24] Ms Behrendorff takes no issue with any aspect of the agreement except says that the restraint clause, subsequently included in the written agreement, was not agreed to by her in conciliation. The restraint clause in the written settlement agreement reads:

6 Restraint

(a) The Employee agrees that they will not carry on, in any capacity, employment within the Group after the termination date.

[25] From those matters put in various emails by Ms Behrendorff she does not dispute any other term of the settlement agreement but insists that she never agreed in conciliation that she would not seek employment with JB HiFi again even though, as is evident from her emails, she does not appear to have much regard for the company.

[26] JB HiFi says that the terms of the settlement agreement it provided in writing to Ms Behrendorff reflect what she agreed to verbally in conciliation and that this included the restraint provision. Further, by its emails to Ms Behrendorff, it is clear that the restraint provision is a standard term in settlement agreements reached by JB HiFi. Given the industry within which it operates this is, perhaps, not surprising.

[27] The matter for me to decide is if a settlement agreement was reached in conciliation and, if it was, whether it was subject to written terms or whether it was agreed that it would be reduced to writing.

[28] In Masters v Cameron 1 the High Court said, of settlement agreements:

  1. 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
  2. In each of the first two cases there 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. Of these two cases the first is the more common…
  3. Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own. The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document…or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed….

[footnotes omitted]

[29] In Baulkham Hills Private Hospital v GR Securities Pty Ltd 2 it was said that there is a fourth type of agreement where the parties intended to be bound immediately and exclusively by agreed terms while expecting to make a further contract in substitution containing, by concept, additional terms.

[30] Whilst the various types of settlement agreements were discussed with Ms Behrendorff during the last mention of her application she failed to grasp that the agreement may have been reached in conciliation and that this could be binding even if the words of the written agreement may have subsequently not been agreed.

[31] In Singh v Sydney Trains 3 the Full Bench of the Fair Work Commission set out in detail the legal principles in relation to offer and acceptance of a settlement proposal. Relevant to the matter before me are the following:

  • Whether the parties intended to be bound by the agreement reached in conciliation is to be determined objectively 4
  • An offer and acceptance must precisely correspond 5
  • Conduct of the parties after making the purported agreement is relevant. Such conduct may be considered in order to determine whether the prior dealings gave rise to a binding contract 6
  • Where the parties reach an agreement of the first kind described in Masters v Cameron or the fourth kind as described in Baulkham Hills they will be bound by the terms of their bargain notwithstanding a later disagreement between them of the terms to be included in the written agreement. 7

[32] As I said above, I am satisfied that there was an agreement reached between the parties at the conciliation conference to settle Ms Behrendorff’s claim for unfair dismissal. Further, I am satisfied that the parties intended to reflect that agreement in writing in a fuller form but without any differing effect. As was said in the decision in Singh v Sydney Trains, a disagreement over as to the terms in the written agreement does not alter that an agreement was, in fact, reached.

[33] The disagreement between Ms Behrendorff and JB HiFi now is not whether an agreement was reached in conciliation but whether the terms of the written agreement provided to her reflects the agreement reached. That is, the dispute is no longer about the settlement of the unfair dismissal claim but rather about the written terms of the agreement.

[34] I would observe, although make no finding, that the terms over which there is dispute (the restraint clause) may well be seen as not an unusual term to include in an agreement where the settlement agreement relates to what was a hotly contested and, on its face, unsavoury workplace incident. Having severed the relationship with Ms Behrendorff it is not unusual that JB HiFi should wish that she not work for it again and that JB HiFi would wish to have this reflected in the written settlement document.

[35] I would observe that Ms Behrendorff’s unwillingness to provide the Commission with any evidence as to what she says occurred at the conciliation conference has left me with no option but, on the material before me, to objectively determine as I have. Attempts to explain to Ms Behrendorff that what the Commission needed to understand, if it was in dispute, was what occurred at conciliation and not what she disagreed with in the written document were to no avail. The evidence, if it did exist, was Ms Behrendorff’s to give but, despite requests, she chose not to do so

Should I dismiss the application for remedy for unfair dismissal?

[36] In Australian Postal Corporation v Gorman 8 Besanko J said:

An accord and satisfaction extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement. A valid accord and satisfaction is not a discretionary factor relevant to the subsequent litigation of the original claim; it is an answer to the claim

[37] That is, having reached an agreement to settle the unfair dismissal application of Ms Behrendorff, that ends the claim for unfair dismissal. The settlement agreement has brought the unfair dismissal application to an end.

[38] Section 587 of the FW Act says:

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 power of the Commission to dismiss an application is wide and is not restricted to the circumstances in s.587(1). I am therefor satisfied that I can dismiss Ms Behrendorff’s application for a remedy for unfair dismissal on the grounds that an agreement to settle that claim was made between Ms Behrendorff and JB HiFi.

[40] In dismissing her application for unfair dismissal I note that Ms Behrendorff has the ability to access the settlement amount set out in the settlement agreement. She can do so by signing the agreement. While I accept that she maintains she did not agree to the restraint clause, her views – expressed strongly – during the exchanges in relation to this question suggest she would not go back to work for JB HiFi.

[41] JB HiFi should be cognisant of its obligations, having reached an agreement in conciliation with Ms Behrendorff.

[42] Having reached a settlement agreement I am satisfied that Ms Behrendorff’s application for unfair dismissal should be dismissed. An order 9 to this effect will be issued with this decision.”

Behrendorff v JB HiFi – (2022) FWC 953 delivered 18 May 2022 per Bissett C