Can a worker dispute a signed settlement deed?

The Fair Work Commission (FWC) recently dealt with a worker’s dismissal claim which challenged a deed of settlement that he signed with his employer, alleging that he was forced and pressured to agree with the terms.

The worker filed an application with the Fair Work Commission seeking a remedy regarding his employment. His work started on 16 March 2020, and he said he was terminated on 16 March 2023, alleging his dismissal took effect the same day.

He filed his application on 23 August, 139 days outside the 21-day statutory time limit. He also attached a deed of release, along with his form, which was signed by the parties.

A specific clause of the deed states:

“The Company and the Employee agree and acknowledge:

• That this Deed is intended to be legally binding;
• In consideration of the Settlement Sum, the Employee agrees to release the Company from all or any liability in respect of all or any Claims made against it by any person or body on the basis that the payment was reduced by tax at the correct rate and the Employee will fully indemnify the Company in respect of all or any claims for unpaid tax, interest and penalties;
• That with effect from the date of execution of this Deed that they will not disparage each other;
• They have freely entered into this Deed after having the opportunity to carefully consider its contents and to obtain legal advice on the matters in this deed.”

The worker said that he had removed certain standard release and indemnity clauses because “he did not intend to be bound by the release.”

Additionally, the worker said that “he was under duress in signing the contract as he had only 4 business hours to sign the document.”

Around September, the FWC informed the worker that the unfair dismissal application would not be able to proceed as there was a deed of settlement that bound the parties.

Despite this, he still wished to be heard on this, and the matter was listed for hearing the following month.

HRD previously reported about a worker’s claim that his unfair dismissal application should be accepted, alleging that his prior settlement agreement with his employer was ineffective.

Is the worker bound by his settlement agreement with the employer?

In its decision, the Commission dismissed the worker's unfair dismissal application, adding "that a binding settlement agreement extinguishes the pre-existing cause of action."

"The continued pursuit of the application based on such cause of action is clearly capable of being considered to be frivolous or vexatious, or without reasonable prospects of success," it added.

Moreover, it said the worker "received consideration for signing the deed of settlement" and, therefore, "it is a binding contract."

"The question of whether the deed was executed correctly, including the limited time the [worker] had to consider the deed and his subsequent alleged duress, is a question for the courts."

"Until there is evidence to establish that the deed has been set aside, the Commission has no jurisdiction to determine this matter," it said.

Thus, it said that between the parties, "the deed of settlement remains binding."