Unfair dismissal terms of settlement

The following summary of the types of settlement agreements reached in the Fair Work Commision is taken from the Commission’s web site.

“Terms of settlement

In Masters v Cameron[1] the High Court determined that there are 3 classes of settlement agreement for when 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 deal with by a formal contract. The 3 classes are:

  1. 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.
  2. 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.
  3. 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 2 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.

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, any binding effect of their own. The expressions ‘subject to contract’, ‘subject to the preparation of a formal contract’ and others of similar import prima facie create an overriding condition so that what has been agreed upon must be regarded as the intended basis for a future contract and not as constituting a contract of itself.[3]

The question of whether or not there was a binding agreement reached between the parties is a matter of fact. Even though the applicant did not sign the agreement arising from conciliation this does not mean that a binding agreement was not reached.[4]”