Settlement agreement reached at conciliation enough to dismiss unfair dismissal application despite no signed settlement agreement

A recent decision of the Fair Work Commission has confirmed that the settlement of an unfair dismissal claim at conciliation can be binding and result in the employee’s claim being dismissed by the Commission, even if the employee later refuses to sign a written settlement agreement.

The employee was unsuccessful in her attempt to continue her unfair dismissal claim after the Fair Work Commission found that the parties had reached a binding settlement agreement at the conciliation. The Commission found there had been a settlement of the claim notwithstanding the fact that the employee refused to sign a settlement document because it contained a clause she objected to, namely, a term preventing her from ever seeking employment with the same  employer in the future.

The issue for the Commission was “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.”

The Commission referred to relevant principles from a Full Bench decision in Singh v Sydney Trains [2017] FWCFB 4562, including that:

• whether the parties had the intention for the agreement reached in conciliation to be binding upon them is to be determined objectively;
• the offer and acceptance are required to “precisely correspond”;
• the parties’ conduct following the making of the purported agreement is relevant; and
• where the agreement reached has particular characteristics, including that the parties intend to be immediately bound by the terms of their bargain, then the agreement will be legally enforceable notwithstanding a later disagreement between the parties about the terms to be included in the written agreement.

In this case, the Commissioner found that at the conciliation conference, the parties reached an agreement to settle the employee’s unfair dismissal claim and “the parties intended to reflect that agreement in writing in a fuller form but without any differing effect.”

The employee did not give any evidence of what happened during the conciliation conference from her perspective.

The Company said the terms in the written settlement agreement reflected the verbal agreement reached during the conciliation and that the term preventing future employment was a standard term in the Company’s settlement agreements. The Commissioner made the observation that the term “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”.

It was noted that the Commission has a wide power to dismiss an unfair dismissal application. In this case, the employee’s unfair dismissal application was dismissed because the Commission was satisfied that a binding settlement agreement had been reached at the conciliation conference.

Key take-away

A key take-away from this case is that there may be a binding settlement of an unfair dismissal claim at a conciliation conference, even if the employee subsequently refuses to sign a formal settlement agreement, such as a deed of release.

When an employer makes offers during a conciliation conference, the employer should do so on the basis that any agreed settlement of the matter is binding on the parties and that the deed of release will have terms usually contained in such documents. If the employer wants to impose more controversial terms in the deed, such as a provision restraining the employee from working for a competitor, this should be made clear and be part of the employer’s offer at conciliation. The employer should ask the conciliator to make a note reflecting that the parties agree the settlement reached at conciliation is binding on them. 

Kellin Behrendorff v JB HiFi [2022] FWC 953 (18 May 2022)

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National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.