A Real Deal: An Unfair Dis­missal Set­tle­ment Goes Wrong

We had a deal!

An employ­er asserts an unfair dis­missal case has been set­tled. The Appli­cant con­tends no such set­tle­ment has tak­en place. How can the employ­er resolve the matter? 

One avenue poten­tial­ly open to employ­ers is sec­tion 399A of the Fair Work Act (FW Act) which is in the fol­low­ing terms:

Dis­miss­ing applications 

(1) The FWC may, sub­ject to sub­sec­tion (2), dis­miss an appli­ca­tion for an order under Divi­sion 4 if the FWC col­lec­tive­ly is sat­is­fied that the appli­cant has unreasonably:

(a) failed to attend a con­fer­ence con­duct­ed by the FWC, or a hear­ing held by the FWC, in rela­tion to the appli­ca­tion; or

(b) failed to com­ply with a direc­tion or order of the FWC relat­ing to the appli­ca­tion; or

(c) failed to discon­tin­ue the appli­ca­tion after a set­tle­ment agree­ment has been concluded. 

(2) The FWC may exer­cise its pow­er under sub-sec­tion (1) on appli­ca­tion by the employer.

(3) This sec­tion does not lim­it when the FWC may dis­miss an appli­ca­tion.” (Empha­sis added.)

Such an appli­ca­tion by an employ­er was con­sid­ered in the recent Fair Work Com­mis­sion (FWC) deci­sion in Robert Bad­cock v N & HM Coop­er Motor Search (SA) & Car Clear­ance Cen­tre (SA) T/A Motor Search [2018] FWC 6978. In this deci­sion, Com­mis­sion­er Hamp­ton had to deter­mine the ques­tion of whether a bind­ing set­tle­ment had been reached to set­tle an unfair dis­missal mat­ter brought by the appli­cant, Mr Badcock.

The motor trade unfair dis­missal claim goes down a long and wind­ing road

Even before the dis­missal appli­ca­tion con­sid­ered in this judg­ment, the case had a con­vo­lut­ed history. 

Some of the key events (which are rel­e­vant to the find­ings in the deci­sion) were as follows:

  • The unfair dis­missal appli­ca­tion was filed by the Appli­cant on 4 July 2018.
  • The par­ties attend­ed a stan­dard FWC con­cil­i­a­tion (con­duct­ed by a staff con­cil­ia­tor) in rela­tion to the appli­ca­tion on 2 August 2018. The mat­ter was not set­tled at this conference.
  • Direc­tions were then made by the FWC for hear­ing of juris­dic­tion­al issues on 29 August 2018.
  • Con­cur­rent with the unfair dis­missal pro­ceed­ings before the FWC there was an under­pay­ment of wages claim raised by Mr Bad­cock with the Fair Work Ombuds­man (FWO). A tele­phone con­cil­i­a­tion was con­duct­ed in that mat­ter on 11 Sep­tem­ber 2018.
  • On 12 Sep­tem­ber 2018 the par­ties attend­ed a fur­ther con­cil­i­a­tion before a mem­ber of the FWC in the unfair dis­missal mat­ter. That con­cil­i­a­tion did not set­tle the proceedings. 
  • Imme­di­ate­ly fol­low­ing that con­cil­i­a­tion, the Appli­cant spoke with Mr Coop­er (the employ­er) and indi­cat­ed he wished to resolve the mat­ter. Mr Coop­er respond­ed that he would dis­cuss the mat­ter with his wife. He then con­tact­ed Mr Bad­cock on 15 Sep­tem­ber and arranged to meet with him. 
  • On 16 Sep­tem­ber 2018, Mr Coop­er and Mr Bad­cock met infor­mal­ly. At that meet­ing it was evi­dent both par­ties want­ed to resolve the mat­ter. At the pre­vi­ous unfair dis­missal con­cil­i­a­tion before the FWC the Appli­cant had offered to set­tle the mat­ter for $10,000. The employ­er had offered $6,500.
  • At this infor­mal meet­ing Mr Coop­er advised he would increase the employ­er’s offer to $8,000. There was a dis­cus­sion that the set­tle­ment pay­ment would be made on a redun­dan­cy basis and be tax free”.
  • At first Mr Bad­cock reject­ed the pro­pos­al but, in a some­what dra­mat­ic twist, just as he was about to walk away he accept­ed this revised offer. They sealed the deal in the tra­di­tion­al way by shak­ing hands and it was agreed the set­tle­ment pay­ment would be made with­in 24 hours.
  • Mr Coop­er advised that he would arrange for the Motor Trade Asso­ci­a­tion of South Aus­tralia (MTA) to pro­vide paper­work to Mr Bad­cock. Mr Bad­cock respond­ed with words to the effect my word is my word”.
  • On 16 Sep­tem­ber 2018 Mr Coop­er direct­ed the MTA to pro­vide to a release agree­ment to Mr Badcock.
  • Lat­er that day Mr Bad­cock emailed Mr Coop­er set­ting out his under­stand­ing of the set­tle­ment that had been reached. 
  • On 17 Sep­tem­ber 2018, Mr Coop­er pro­vid­ed the deed of release pre­pared by the MTA to Mr Bad­cock. Com­mis­sion­er Hamp­ton described it as a rel­a­tive­ly stan­dard but com­pre­hen­sive deed that pur­port­ed to release the employ­er from all claims aris­ing from the employ­ment, with the only excep­tion being work­ers com­pen­sa­tion matters. 
  • Mr Bad­cock con­sid­ered the pro­posed MTA deed to be inap­pro­pri­ate. He referred Mr Coop­er to the email in which he had set out his under­stand­ing of the settlement.
  • On 18 Sep­tem­ber 2018 the MTA, on behalf of the employ­er, wrote to FWC to advise that the par­ties had reached an in-prin­ci­ple set­tle­ment agree­ment”.
  • On 19 Sep­tem­ber 2018 Mr Bad­cock con­tact­ed Mr Coop­er and indi­cat­ed he was yet to be paid the set­tle­ment sum. He request­ed the amount to be paid and, upon receipt of that pay­ment, he would then advise the FWC the mat­ter had set­tled. Mr Coop­er replied the pay­ment had not been made because Mr Bad­cock had not exe­cut­ed the deed. 
  • On instruc­tion from Mr Coop­er, an updat­ed deed was pro­vid­ed to Mr Bad­cock by the MTA reflect­ing that the time for pay­ment was 24 hours.
  • On 19 Sep­tem­ber 2018 the direc­tions and sched­uled hear­ing were vacat­ed by the FWC on the basis that the Appli­cant would file a Notice of Dis­con­tin­u­ance once there had been com­pli­ance with the terms of settlement.
  • On 25 Sep­tem­ber 2018, Mr Coop­er cor­re­spond­ed with Mr Bad­cock indi­cat­ing that revised deed had been fur­nished (pro­vid­ing for pay­ment with­in 24 hours).
  • Mr Bad­cock made no response to this cor­re­spon­dence but request­ed the FWC relist the unfair dis­missal matter.
  • In Octo­ber 2018, an under­pay­ment of wages claim was lodged with the South Aus­tralian Employ­ment Tri­bunal by Mr Bad­cock, seek­ing a pay­ment in the order of $140,000.

The FWC Deliberations 

The employ­er made an appli­ca­tion for the FWC to exer­cise its pow­ers pur­suant to sec­tion 399A of the Act and dis­miss the proceedings. 

Com­mis­sion­er Hamp­ton had to con­sid­er whether a set­tle­ment agree­ment had been con­clud­ed. (With­out a con­clud­ed set­tle­ment, the dis­cre­tion in sec­tion 399A could not be enlivened.)

In the course of doing this Com­mis­sion­er Hamp­ton sur­veyed author­i­ties relat­ing to con­trac­tu­al terms includ­ing Singh v Syd­ney Trains [2017] FWCFB 4562 and the sem­i­nal High Court deci­sion in Mas­ters v Cameron [1954] HCA 72, (1954) 91 CLR 353

Com­mis­sion­er Hamp­ton held that if any agree­ment was made on 16 Sep­tem­ber 2018 it was not con­di­tion­al upon a deed being pro­vid­ed and that the two ver­sions of the deed pro­vid­ed by the MTA did not sub­se­quent­ly become the agree­ment between the parties.

Com­mis­sion­er Hamp­son did, how­ev­er, determine:

I am sat­is­fied that both par­ties intend­ed to make a bind­ing agree­ment and pro­posed restate­ment of the terms of set­tle­ment in a for­mal or more pre­cise writ­ten form, which was not to be dif­fer­ent in effect. That is, the pay­ment of $8,000 paid by the respon­dent with­in 24 hours was intend­ed to resolve the mat­ter and enable the par­ties to move on. As con­firmed in the evi­dence, details as to how the pay­ment might be made and sup­ple­men­tary con­di­tions such as con­fi­den­tial­i­ty could be con­tained in the full and more pre­cise’ form of a writ­ten con­fir­ma­tion; that is, in a deed reflect­ing the agreed terms.”

Com­mis­sion­er Hamp­ton continued:

This view is entire­ly con­sis­tent with the con­duct of the par­ties includ­ing the com­mu­ni­ca­tions made by them imme­di­ate­ly after the meet­ing. Both have also (until the mak­ing of the request to relist the unfair dis­missal mat­ter) con­duct­ed them­selves as hav­ing reached an agree­ment but with some of the ancil­lary detail to be confirmed.”

A con­tention by the employ­er that the set­tle­ment was intend­ed to include the under­pay­ment claim was, how­ev­er, reject­ed by Com­mis­sion­er Hamp­ton who, after con­sid­er­ing the spe­cif­ic evi­dence on the mat­ter, deter­mined the res­o­lu­tion per­tained only to the FWC unfair dis­missal pro­ceed­ings as opposed to the under­pay­ment claim. 

In that regard Com­mis­sion­er Hamp­ton observed:

It is com­mon ground that the pro­posed scope of the set­tle­ment was not express­ly dis­cussed in the 16 Sep­tem­ber meet­ing and there is insuf­fi­cient evi­dence about the ear­li­er dis­cus­sions to make any find­ings as to whether there was an expressed con­fir­ma­tion of the scope of any offers pri­or to meeting.”

On this spe­cif­ic point Com­mis­sion­er Hamp­ton fur­ther observed:

It is a rea­son­able objec­tive under­stand­ing that the par­ties were meet­ing to resolve the unfair dis­missal mat­ter. Although Mr Coop­er may have had a broad­er inten­tion asso­ci­at­ed with his offer, as he accept­ed in his evi­dence, this was not com­mu­ni­cat­ed in the meet­ing con­cerned, and whilst the MTA, act­ing in the inter­ests of Motor Search, draft­ed a broad deed of release, this was not in my view reflec­tive of the agree­ment reached between Mr Coop­er and Mr Bad­cock on 16 Sep­tem­ber 2018. Mr Bad­cock­’s email lat­er that day actu­al­ly record­ed the sub­stan­tive terms of the agree­ment made.”

Com­mis­sion­er Hamp­ton found the par­ties had con­clud­ed an agree­ment. This was the first step in sat­is­fy­ing sec­tion 399A and hav­ing the pro­ceed­ings dismissed. 

The Com­mis­sion­er still need­ed to deter­mine whether to exer­cise his dis­cre­tion to dis­miss the appli­ca­tion. (The rel­e­vant pro­vi­sion says the FWC may” dis­miss an appli­ca­tion in the event of a con­clud­ed set­tle­ment – it is not oblig­ed to do so.)

On the basis of the find­ing that the par­ties had entered into an agree­ment to set­tle the unfair dis­missal mat­ter on 16 Sep­tem­ber 2018, the $8,000 set­tle­ment amount was due and payable by the employ­er on the agreed terms. The employ­er con­firmed dur­ing pro­ceed­ings that the pay­ment would be made if a valid set­tle­ment was found. Giv­en that con­fir­ma­tion, Com­mis­sion­er Hamp­ton found that it was fair and appro­pri­ate” to exer­cise the dis­cre­tion and dis­miss the proceedings. 

Impli­ca­tions for Employers 

Sec­tion 399A of the FW Act pro­vides a mech­a­nism for con­clud­ing unfair dis­missal proceedings. 

In order to con­vince the FWC to exer­cise its dis­cre­tion to dis­miss pro­ceed­ings, an employ­er should be will­ing to pro­vide a com­mit­ment that it will abide by the terms of the set­tle­ment upon which it relies. In the absence of such a com­mit­ment, it is (under­stand­ably) unlike­ly the FWC would exer­cise the discretion. 

As the above case illus­trates, in deter­min­ing these mat­ters the FWC will close­ly scru­ti­nise the facts sur­round­ing any puta­tive set­tle­ment. Even if an infor­mal” agree­ment is reached it is still pru­dent to record its terms so there is con­tem­po­ra­ne­ous evi­dence of it and the prob­lem of com­pet­ing ver­sions of events, and the con­comi­tant con­fu­sion and uncer­tain­ty, can be elim­i­nat­ed or at least minimised.

Sec­tion 399A also pro­vides grounds for an employ­er to seek dis­missal of unfair dis­missal pro­ceed­ings in the case of an absent or dila­to­ry appli­cant. Much like aban­don­ment of employ­ment, how­ev­er, one missed dead­line or con­fer­ence is unlike­ly to lead to the FWC exer­cis­ing a dis­cre­tion to dis­miss an appli­ca­tion on this basis. 

For such an appli­ca­tion to be suc­cess­ful, the employ­er will like­ly need to be able to cite a pat­tern or course of con­duct con­sis­tent with a lax or con­temp­tu­ous approach to the con­duct of proceedings.