Most people go into conciliation conferences in the Fair Work Commission thinking about the basic outcomes they want, whether it be reinstatement, a resignation, compensation or other non financial outcomes. A practical settlement at a conference often involves the employer agreeing to change the termination to a resignation, the provision of a statement of service or reference, the parties agreeing not to make adverse comment about each other and, perhaps, some additional financial payment (subject to tax).
This is often said to be subject to the “usual” terms which comprise a release from liability and confidentiality terms. The FWC will often offer its standard terms of settlement or an employer may wish to provide its own terms. This is where confusion can arise about the detail of the settlement. For instance, it is common that a settlement document will usually contain a complete release from all claims arising out of the employment, with the exception of statutory workers compensation claims and unpaid statutory superannuation. A no adverse comment clause may contain an explicit requirement for the employee but only an assurance of “reasonable endeavours’ by the employer. An applicant may not think about asking for a mutual release until after the conference. Sometimes a draft deed is provided which may have additional terms such as an agreement not to seek employment with the same employer in the future or not to enter the employer’s premises.
There are some basic points to keep in mind:
1. A conference settlement is usually a binding settlement, even if not all terms have been specifically stated;
2. There is generally no such thing as a “settlement in principle” unless it is expressly stated that any settlement is subject to a satisfactory written agreement being executed;
3. An agreement does not have to be signed to be binding;
4. Unless there is a specific “cooling off” period, there is no opportunity to change your mind after settlement has been reached;
5. “Settlers remorse” is not sufficient and reluctance or a feeling of having no choice are not the same as legal duress or being medically incapable of agreement.
It is best to be as certain as possible of all relevant terms of settlement at the conference itself. Issues which can arise include:
a. Are the parties clearly identified?
b. Is the amount of any payment clear?
c. What is the time for payment?
d. What is the applicable tax to be deducted?
e. Is the payment to be made to the applicant directly or a representative?
f. Are the parties clear about what claims are being released?
g. Is there to be a mutual release?
h. Are the parties clear about what is going to be in the statement of service or reference?
i. Is there to be a mutual non disparagement clause?
j. Are post employment restraints still relevant?
Think about letting the other side know what are acceptable terms of settlement before the conference and even provide a draft settlement agreement or statement of acceptable terms beforehand. Ultimately, there is either a settlement or not and the FWC has very limited power to set aside an agreement.
What happens if one party decides there has not been an agreement? Employees will usually try to re activate their original claim whether it be an unfair dismissal or general protections claim. The task for the FWC is to determine if there was a settlement or not and what are key terms or not key terms. This is where the keeping of good conference notes can be important. If the FWC determines there was a settlement, then the employer should comply with the basic terms of settlement regardless of whether there is a signed agreement. Alternatively, it will be necessary for the applicant to commence a claim in the civil courts for breach of contract if the settlement amount is not paid.
This is sometimes a less than ideal situation as parties are often placed under practical pressure to make a decision about an offer of settlement. One tip for both parties is to ask for a day or 2 to consider a final offer if you are uncertain whether to accept it. Otherwise, you may have plenty of time to regret a hasty decision. These comments have particular application to FWC matters but also apply more generally as well. Please contact us if you would like any further information or help.