One of the first steps that the Fair Work Commission (FWC) takes when dealing with unfair dismissal claims is to require the parties to participate in a conciliation.

The purpose of a conciliation is to help the parties resolve the matter without the need go to a full hearing before a FWC member. In its most recent quarterly report on unfair dismissal applications, the FWC reported that about 59% of unfair dismissal claims were settled at conciliation.

Settlement at a conciliation constitutes a binding agreement between the parties and is usually put in writing following the conciliation, either by the conciliator drafting terms of settlement, or one of the parties doing so.

Whilst most parties who settle at conciliation leave with a sense of relief that the issues have been put to bed, on rare occasions, some parties go on to dispute the settlement.

This was the case in a recent decision of the FWC where an employee who settled his unfair dismissal claim at conciliation later sought to have the matter re-opened (Scicluna v Australia Postal Corporation T/A Australia Post [2018] FWC 3467).

The employee was employed by Australia Post and dismissed for reasons of misconduct.

Prior to his dismissal, the employee had lodged a workers’ compensation claim with Australia Post claiming payments for incapacity.

Following his dismissal, the employee lodged an unfair dismissal application with the FWC. At the conciliation, the parties reached a settlement – a term of which was that the employee would be allowed to resign from his employment effectively substituting his dismissal for a resignation. The conciliator drew up the terms of settlement and forwarded the written terms to the parties for execution.

The employee claimed that he was told twice that the settlement would not have any effect, and was “separate” to, his workers compensation claim.

After the conciliation, the employee was advised by Australia Post that his claim for incapacity payments was denied on the basis that his resignation was evidence of his failure “to continue in suitable employment.”

Neither the employee nor Australia Post signed the terms of settlement drawn up by the conciliator.

The employee subsequently applied to the FWC to re-open his unfair dismissal case on the basis that the settlement reached between the parties was not binding.

The FWC examined the history of the proceedings and reviewed the contemporaneous file notes and emails surrounding the conciliation. The FWC concluded that the parties had agreed to settle the matter and the terms of settlement were merely a formality – the fact that they were not executed by the parties did not alter the fact that there existed a binding agreement.

In relation to the workers compensation claim, the FWC noted that the matter was before the AAT and if the employee’s claim was impacted by his resignation, it was appropriate that he pursue the matter in another jurisdiction.

Lesson for employers

All parties should be clear about the ramifications of settlement before making any settlement agreement (in any jurisdiction).

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