Unfair dismissal settlements at conciliation

It is quite common for parties to reach a settlement of an unfair dismissal claim at conciliation but for one or both parties to subsequently to walk away from the agreement. Here are the legal principles.

Legal Principles

[39] The legal principles relevant to the determination of whether a binding settlement agreement has been reached between parties was considered in Singh v Sydney Trains 1:

[46] Chief Justice Bathurst of the New South Wales Supreme Court explained the relevant principles concerning intention to create legal relations in the following way in Pavlovic v Universal Music Australia Pty Limited: 2

“It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties’ dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337).”

[47] The present case does not involve complexities which often arise where contractual intention is inferred from behaviour, or is imputed. 3 Whether there was a legally binding settlement reached between Mr Singh and Sydney Trains involves interpretation of the express written communications between the parties’ solicitors.

[48] An offer and acceptance must precisely correspond. The following principles are relevant to this requirement:

  • An acceptance corresponds to an offer if it is an unequivocal acceptance of the terms offered. 4
  • An acceptance is not an unequivocal acceptance of the terms offered if it deviates from the offer, even if that deviation is not material or important. However, as a qualification to this principle, if a new term is included in a purported acceptance of an offer and the new term is solely for the benefit of the offeror, then this can constitute a valid acceptance. 5
  • An acceptance will be effective if it does not depart from the terms of the offer, but simply repeats in the offeree’s own words the effect of the offer. 6
  • Acceptance will be effective if it sets out expressly what would be implied by law in the absence of express agreement. 7For example, an offer may contemplate that, were it to be accepted, a document would be prepared to record its terms. In proposing that a deed be prepared as part of an acceptance of such an offer, the offeree would be stating that which would be implied by law arising from the terms of the offer, namely, that it would be documented in some formal manner.8
  • Similarly, if a purported acceptance of an offer merely includes the “machinery of working out what was meant by the offer, it is on the same plight as a request for information”. 9Such a request for information does not revoke the offer and may constitute acceptance of the offer.

[49] Ultimately the question is whether a “reasonable recipient of the acceptance would have regarded it as corresponding to the offer or whether they would have taken the acceptance to be qualifying the original offer such that it would amount to a counter-offer or, at any rate, not an unconditional acceptance of what was originally offered.” 10 Put another way, the language used by the offeree in their acceptance of the offer must be such as would convey to a reasonable person in the position of the offeror a clear and definite decision by the offeree to be bound by the terms of the offer, leaving nothing further to be negotiated.11

[50] A purported acceptance which does not correspond to the offer does not necessarily reject the first offer; it is, nevertheless, a counter-offer capable of acceptance. 12 A counter-offer accepted by the original offeror creates a binding agreement.13

[51] Conduct of the parties after the making of the supposed agreement is relevant. Such conduct may be considered in order to determine whether the prior dealings between the parties gave rise to a binding contract. 14

[52] The phrase “‘in principle’ agreement” or similar is often used when negotiating the settlement of litigation and generally indicates that there is no intention yet to enter into a binding contract. 15 However, such words must be construed in the context in which they appear and the commercial setting in which the parties were operating.16 In each case, “much will depend upon the individual circumstances of each case as to whether those words demonstrate that the parties had or had not reached a consensus on the essential terms of their bargain and whether they intended to be immediately bound by them”.17

[53] If parties who have been in negotiations reach agreement on terms of a contractual nature and also agree that those terms will be dealt with by subsequent formal documentation, there are several categories into which such negotiations fall. 18 First, the parties reach finality, intend to be immediately bound, and propose restatement of the terms of settlement in a fuller or more precise form but not different in effect. Secondly, the parties have completely agreed all terms but performance of one or more terms is conditional on execution of a formal document. Thirdly, the parties did not intend to make a concluded bargain at all, unless and until they execute a formal contract. Fourthly, 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.19

[54] When parties do reach an agreement of the first or fourth category referred to in Masters v Cameron and Baulkham Hills, they will be bound by the terms of their bargain, notwithstanding a later disagreement between the parties about the terms to be included in a deed or written agreement between them. 20

[40] I have applied these principles in the determination of the matter before me.

Consideration

[41] It is well established that an agreement that is not signed can nevertheless be binding on the parties to it. 21

[42] Both the TWU and the Respondent say they reached an agreement in the period following conciliation. However, the Applicant denies that such an agreement was ever reached or that he gave instructions to the TWU as his representative that agreement was reached.

[43] The issue for determination is whether there was an agreement to settle the unfair dismissal proceedings and, if there was, what type of agreement was reached and what obligations it placed on the parties.

[44] Determination of whether an agreement was reached gives rise to the question of whether the Applicant provided any instructions to Mr Pinkas to settle the proceedings on the basis ultimately agreed between Mr Pinkas and the Respondent and reflected in the written agreement provided to the Applicant on 27 October 2020. This question turns on the substance of the communications that took place between the Applicant and Mr Pinkas during the period October 2020 – March 2021.

[45] There is no doubt that discussions did occur between the Applicant and Mr Pinkas about potential terms of settlement. The TWU submits that Mr Pinkas gave clear advice about the range of remedies available and the difficulties and risks associated with withdrawing from an in principle agreement. According to the TWU, the Applicant said he was willing to resolve the matter on the proposed terms (including the apparent amendment in relation to workplace injury related issues).

[46] The Applicant submits that the immediacy with which he contacted the staff conciliator by way of the email of 8:43am 15 October 2020 to inform them that he had not reached a settlement supports a finding that he had not provided instructions that he was willing to settle the matter. A conclusion to this effect is supported by the evidence that further negotiations occurred with amendments agreed between the Respondent and Mr Pinkas up to 27 October 2020 and that the Applicant sought a higher payment than that offered by the Respondent.

[47] In the 23 December 2020 email from the Applicant to Mr Pinkas that was sent some 2 months after the “finalised” deed was provided to him, the Applicant stated that “upon further consideration” and after having received “third party” advice he now sought an increased settlement sum. Whilst this communication might favour the view that the Applicant had agreed to the terms as originally proposed (as he now sought some variation to it), it, in conjunction with his communication of 15 October 2020 with the Commission supports a conclusion that there may not have been clarity in communications between Mr Meekin and the TWU. This is not a criticism of the TWU. Having heard from Mr Meekin and observed him give evidence in these proceedings it is apparent that he does not listen well and has a very scattered approach in his communication of ideas and thoughts with multiple trains of thought but little coherence evident when he speaks. The Applicant, in this respect, seems to be driven more by what he believes he is entitled to rather than a dispassionate review of his case or of communications he was engaged in with his representative. In this respect I would observe that the proposed agreement of 27 October 2020 gave the Applicant that which he sought in relation to his common law action in relation to his injury.

[48] It is also apparent from the evidence of the Applicant that he has constantly sought advice that suits the outcome he believes he is entitled to. He did not think Mr Pinkas was doing enough for him as he “knew” that another worker from the Respondent who had been dismissed had received a larger settlement when represented by another TWU organiser. Mr Meekin wanted that person to represent him. Mr Meekin wanted the TWU to refer him for legal advice and says that Mr Pinkas refused to do this. Mr Meekin also sought “third party advice” (it is not clear from whom but at least from “Chris”) who suggested he should get a better settlement. Mr Meekin, astonishingly, thought the TWU should pursue this improved assessment on his behalf when the TWU assessment was that he had received the best offer he could get.

[49] It is clear from the communications between the Applicant, Mr Pinkas and the Respondent that no agreement was a reached on 15 October 2020. It was wrong of the TWU to advise the Commission this was the case. However, I am satisfied that the Applicant did reluctantly agree to the amended offer which included the resolution of his right to pursue his common law workplace injury matter. This offer was reflected in the proposed agreement of 27 October 2020. Further, I am satisfied that the parties reached agreement at or before 27 October 2020 and intended to be bound by the agreement but that it was to be reduced to writing.

[50] It is not in dispute that no settlement agreement has been signed by the parties and that no payment has been made by the Respondent to Mr Meekin.

[51] I accept, in the absence of any advice to the contrary, that the draft agreement provided to Mr Meekin by Mr Pinkas reflects the agreement reached between the Respondent and the TWU on Mr Meekin’s behalf. The settlement agreement sent by Mr Pinkas which Mr Meekin was asked to sign on 27 October 2020 however contains a conditional release clause. Clause 3.6 states (with my emphasis):

On the Respondent complying with clauses 3.1 to 3.5 above, the Applicant releases and forever discharges and releases the Respondent, its directors, employees, assignees or successors from any liability past, present or future from all claims, suits, demands, actions or proceedings arising out of or connected with the Applicant‘s employment with the Respondent, including but not limited to the cessation of the employment.

[52] Clauses 3.1-3.5 reflect the payment of the settlement amount to the Applicant, matters associated with that payment and that the Applicant would be considered to have resigned his position. The release given by the Applicant is wholly dependent on the Respondent complying with its obligations.

[53] The release clause in the agreement has not been “activated” as would occur if the Respondent had complied with its obligations under the agreement. In this way the agreement reached can be characterised as an “accord and conditional satisfaction”. 22 Had the Respondent complied with its obligations under the agreement the matter for me to determine may have been different. As it is, neither Mr Meekin nor the Respondent has complied with its obligations. Both have walked away and neither disputes that this has been legitimately done such that all that is left is the initial application of Mr Meekin for unfair dismissal.

[54] Ultimately the Respondent holds the key to this matter. It says that the agreement reached was never executed and therefore not finalised (in the Respondent’s words) although did not articulate what “not finalised” meant. There is no evidence of the Respondent itself signing the written documentation. Further, there is no evidence of payment being made to the Applicant (and no claim that such a payment was made) such that the release condition contained in the agreement has not been met.

[55] For this reason the Applicant has not provided any release to the Respondent from his claims in relation to his employment.

Conclusion

[56] I have considered all of the evidence including each of the reasons set out in the Applicant’s written submissions to argue no binding agreement was reached. Regardless of whether a binding settlement agreement was reached the agreement put to the Applicant does not, on its terms, operate to limit the unfair dismissal claim. As the Respondent says the agreement was not finalised. For this reason the application for relief from unfair dismissal will be referred for arbitration.

[57] The Applicant should not take this decision as any indication as to the merits of his claim or any likely outcome of arbitration of his claim.

Legal Principles

[39] The legal principles relevant to the determination of whether a binding settlement agreement has been reached between parties was considered in Singh v Sydney Trains 1:

[46] Chief Justice Bathurst of the New South Wales Supreme Court explained the relevant principles concerning intention to create legal relations in the following way in Pavlovic v Universal Music Australia Pty Limited: 2

“It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties’ dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337).”

[47] The present case does not involve complexities which often arise where contractual intention is inferred from behaviour, or is imputed. 3 Whether there was a legally binding settlement reached between Mr Singh and Sydney Trains involves interpretation of the express written communications between the parties’ solicitors.

[48] An offer and acceptance must precisely correspond. The following principles are relevant to this requirement:

  • An acceptance corresponds to an offer if it is an unequivocal acceptance of the terms offered. 4
  • An acceptance is not an unequivocal acceptance of the terms offered if it deviates from the offer, even if that deviation is not material or important. However, as a qualification to this principle, if a new term is included in a purported acceptance of an offer and the new term is solely for the benefit of the offeror, then this can constitute a valid acceptance. 5
  • An acceptance will be effective if it does not depart from the terms of the offer, but simply repeats in the offeree’s own words the effect of the offer. 6
  • Acceptance will be effective if it sets out expressly what would be implied by law in the absence of express agreement. 7  For example, an offer may contemplate that, were it to be accepted, a document would be prepared to record its terms. In proposing that a deed be prepared as part of an acceptance of such an offer, the offeree would be stating that which would be implied by law arising from the terms of the offer, namely, that it would be documented in some formal manner.8
  • Similarly, if a purported acceptance of an offer merely includes the “machinery of working out what was meant by the offer, it is on the same plight as a request for information”. 9 Such a request for information does not revoke the offer and may constitute acceptance of the offer.

[49] Ultimately the question is whether a “reasonable recipient of the acceptance would have regarded it as corresponding to the offer or whether they would have taken the acceptance to be qualifying the original offer such that it would amount to a counter-offer or, at any rate, not an unconditional acceptance of what was originally offered.” 10 Put another way, the language used by the offeree in their acceptance of the offer must be such as would convey to a reasonable person in the position of the offeror a clear and definite decision by the offeree to be bound by the terms of the offer, leaving nothing further to be negotiated.11

[50] A purported acceptance which does not correspond to the offer does not necessarily reject the first offer; it is, nevertheless, a counter-offer capable of acceptance. 12 A counter-offer accepted by the original offeror creates a binding agreement.13

[51] Conduct of the parties after the making of the supposed agreement is relevant. Such conduct may be considered in order to determine whether the prior dealings between the parties gave rise to a binding contract. 14

[52] The phrase “‘in principle’ agreement” or similar is often used when negotiating the settlement of litigation and generally indicates that there is no intention yet to enter into a binding contract. 15 However, such words must be construed in the context in which they appear and the commercial setting in which the parties were operating.16 In each case, “much will depend upon the individual circumstances of each case as to whether those words demonstrate that the parties had or had not reached a consensus on the essential terms of their bargain and whether they intended to be immediately bound by them”.17

[53] If parties who have been in negotiations reach agreement on terms of a contractual nature and also agree that those terms will be dealt with by subsequent formal documentation, there are several categories into which such negotiations fall. 18 First, the parties reach finality, intend to be immediately bound, and propose restatement of the terms of settlement in a fuller or more precise form but not different in effect. Secondly, the parties have completely agreed all terms but performance of one or more terms is conditional on execution of a formal document. Thirdly, the parties did not intend to make a concluded bargain at all, unless and until they execute a formal contract. Fourthly, 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.19

[54] When parties do reach an agreement of the first or fourth category referred to in Masters v Cameron and Baulkham Hills, they will be bound by the terms of their bargain, notwithstanding a later disagreement between the parties about the terms to be included in a deed or written agreement between them. 20

[40] I have applied these principles in the determination of the matter before me.

Consideration

[41] It is well established that an agreement that is not signed can nevertheless be binding on the parties to it. 21

[42] Both the TWU and the Respondent say they reached an agreement in the period following conciliation. However, the Applicant denies that such an agreement was ever reached or that he gave instructions to the TWU as his representative that agreement was reached.

[43] The issue for determination is whether there was an agreement to settle the unfair dismissal proceedings and, if there was, what type of agreement was reached and what obligations it placed on the parties.

[44] Determination of whether an agreement was reached gives rise to the question of whether the Applicant provided any instructions to Mr Pinkas to settle the proceedings on the basis ultimately agreed between Mr Pinkas and the Respondent and reflected in the written agreement provided to the Applicant on 27 October 2020. This question turns on the substance of the communications that took place between the Applicant and Mr Pinkas during the period October 2020 – March 2021.

[45] There is no doubt that discussions did occur between the Applicant and Mr Pinkas about potential terms of settlement. The TWU submits that Mr Pinkas gave clear advice about the range of remedies available and the difficulties and risks associated with withdrawing from an in principle agreement. According to the TWU, the Applicant said he was willing to resolve the matter on the proposed terms (including the apparent amendment in relation to workplace injury related issues).

[46] The Applicant submits that the immediacy with which he contacted the staff conciliator by way of the email of 8:43am 15 October 2020 to inform them that he had not reached a settlement supports a finding that he had not provided instructions that he was willing to settle the matter. A conclusion to this effect is supported by the evidence that further negotiations occurred with amendments agreed between the Respondent and Mr Pinkas up to 27 October 2020 and that the Applicant sought a higher payment than that offered by the Respondent.

[47] In the 23 December 2020 email from the Applicant to Mr Pinkas that was sent some 2 months after the “finalised” deed was provided to him, the Applicant stated that “upon further consideration” and after having received “third party” advice he now sought an increased settlement sum. Whilst this communication might favour the view that the Applicant had agreed to the terms as originally proposed (as he now sought some variation to it), it, in conjunction with his communication of 15 October 2020 with the Commission supports a conclusion that there may not have been clarity in communications between Mr Meekin and the TWU. This is not a criticism of the TWU. Having heard from Mr Meekin and observed him give evidence in these proceedings it is apparent that he does not listen well and has a very scattered approach in his communication of ideas and thoughts with multiple trains of thought but little coherence evident when he speaks. The Applicant, in this respect, seems to be driven more by what he believes he is entitled to rather than a dispassionate review of his case or of communications he was engaged in with his representative. In this respect I would observe that the proposed agreement of 27 October 2020 gave the Applicant that which he sought in relation to his common law action in relation to his injury.

[48] It is also apparent from the evidence of the Applicant that he has constantly sought advice that suits the outcome he believes he is entitled to. He did not think Mr Pinkas was doing enough for him as he “knew” that another worker from the Respondent who had been dismissed had received a larger settlement when represented by another TWU organiser. Mr Meekin wanted that person to represent him. Mr Meekin wanted the TWU to refer him for legal advice and says that Mr Pinkas refused to do this. Mr Meekin also sought “third party advice” (it is not clear from whom but at least from “Chris”) who suggested he should get a better settlement. Mr Meekin, astonishingly, thought the TWU should pursue this improved assessment on his behalf when the TWU assessment was that he had received the best offer he could get.

[49] It is clear from the communications between the Applicant, Mr Pinkas and the Respondent that no agreement was a reached on 15 October 2020. It was wrong of the TWU to advise the Commission this was the case. However, I am satisfied that the Applicant did reluctantly agree to the amended offer which included the resolution of his right to pursue his common law workplace injury matter. This offer was reflected in the proposed agreement of 27 October 2020. Further, I am satisfied that the parties reached agreement at or before 27 October 2020 and intended to be bound by the agreement but that it was to be reduced to writing.

[50] It is not in dispute that no settlement agreement has been signed by the parties and that no payment has been made by the Respondent to Mr Meekin.

[51] I accept, in the absence of any advice to the contrary, that the draft agreement provided to Mr Meekin by Mr Pinkas reflects the agreement reached between the Respondent and the TWU on Mr Meekin’s behalf. The settlement agreement sent by Mr Pinkas which Mr Meekin was asked to sign on 27 October 2020 however contains a conditional release clause. Clause 3.6 states (with my emphasis):

On the Respondent complying with clauses 3.1 to 3.5 above, the Applicant releases and forever discharges and releases the Respondent, its directors, employees, assignees or successors from any liability past, present or future from all claims, suits, demands, actions or proceedings arising out of or connected with the Applicant‘s employment with the Respondent, including but not limited to the cessation of the employment.

[52] Clauses 3.1-3.5 reflect the payment of the settlement amount to the Applicant, matters associated with that payment and that the Applicant would be considered to have resigned his position. The release given by the Applicant is wholly dependent on the Respondent complying with its obligations.

[53] The release clause in the agreement has not been “activated” as would occur if the Respondent had complied with its obligations under the agreement. In this way the agreement reached can be characterised as an “accord and conditional satisfaction”. 22 Had the Respondent complied with its obligations under the agreement the matter for me to determine may have been different. As it is, neither Mr Meekin nor the Respondent has complied with its obligations. Both have walked away and neither disputes that this has been legitimately done such that all that is left is the initial application of Mr Meekin for unfair dismissal.

[54] Ultimately the Respondent holds the key to this matter. It says that the agreement reached was never executed and therefore not finalised (in the Respondent’s words) although did not articulate what “not finalised” meant. There is no evidence of the Respondent itself signing the written documentation. Further, there is no evidence of payment being made to the Applicant (and no claim that such a payment was made) such that the release condition contained in the agreement has not been met.

[55] For this reason the Applicant has not provided any release to the Respondent from his claims in relation to his employment.

Conclusion

[56] I have considered all of the evidence including each of the reasons set out in the Applicant’s written submissions to argue no binding agreement was reached. Regardless of whether a binding settlement agreement was reached the agreement put to the Applicant does not, on its terms, operate to limit the unfair dismissal claim. As the Respondent says the agreement was not finalised. For this reason the application for relief from unfair dismissal will be referred for arbitration.

[57] The Applicant should not take this decision as any indication as to the merits of his claim or any likely outcome of arbitration of his claim.”

 

Passage from Meekin v Suez Recycling and Recovery Pty Ltd (2021) FWC 2254 delivered 31 May 2021 per Bissett C