Can a worker still claim unfair dismissal after a ‘mutual agreement’?

Under Australian labour law, a worker can file an unfair dismissal claim even after a mutual separation agreement has been reached.

However, it can be difficult to do so as the worker has essentially agreed to end their employment voluntarily.

To successfully file an unfair dismissal claim, the worker must prove that the employer coerced them into signing the agreement or that they were misled about their rights.

In this case, the worker claimed unfair dismissal even after the employer drafted their separation agreement, claiming he didn’t sign the document. On the other hand, the employer said he transferred a company vehicle without its knowledge, violating their terms.

Will the Fair Work Commission (FWC) accept it?

Allegations of stolen equipment

In October 2022, the employer told the worker that they would meet to discuss allegations of stolen equipment and material from building sites.

The worker refused to attend the meeting. The employer then determined that if the worker would not defend himself or provide any information for evidence, it would terminate his employment immediately.

After much discussion, the parties then agreed to a “mutual separation.” The separation terms were agreed to and put in a letter. The employer drafted the document detailing the worker’s benefits, how much he would receive, and the sale of a Toyota Landcruiser for a certain amount.

The employer purchased the car for the worker’s personal use, and he had been offsetting bonuses and other payments toward the vehicle.

The employer paid the lease payments, and the worker’s contribution was offset against the lease payments. There were also agreements about the return of company property, including keys, laptops, tools, and other building equipment, including a Bobcat. On 11 October 2022, an updated lease figure payout was provided to the worker.

More than a week later, the employer updated some figures for the worker’s entitlements in their agreement, saying it committed “errors in its calculations.”

Later, the worker and his wife took the vehicle for a safety check and paid for the services.

The employer then asked for the mutual separation document to be signed before it would transfer the vehicle.

At this point, the worker refused to sign the letter. He also had the vehicle transferred without the employer’s knowledge or agreement.

According to records, “it was clear that the parties had reached an agreement with the separation on mutual conditions on 6 October 2022.”

However, it seemed that “each party, although agreeing and sticking to the terms of the agreement, still had a concern the other party would not complete the agreement.”

“The car transfer is the key matter of sensitivity,” the commission noted.

The worker filed an unfair dismissal claim once the vehicle had been transferred to their ownership.

Meanwhile, the employer insisted that both parties agreed to a mutual separation on terms the worker sought to alter.

“The worker agreed to leave the employment on the basis that it was a mutual decision, and by making an application for an unfair dismissal, the worker is breaking the binding agreement,” the employer argued.

The FWC’s consideration

The FWC found that the parties reached a binding settlement agreement where they negotiated that the employer would not dismiss the worker for serious misconduct and the latter would leave on terms that included the sale of the car to him on a beneficial arrangement. 

The moment that they agreed to the terms, they were “immediately binding,” the commission said, although the worker, in the end, refused to sign it and instead facilitated the vehicle transfer without the employer’s knowledge.

HRD previously reported on the case of a worker who claimed unfair dismissal after being fired in the middle of a meeting.

In another story, a worker argued that he was unfairly dismissed after he “expected” that his contract would be renewed, but the employer denied it, saying that their agreement would expire on a fixed term.

In this case, the FWC said that the terms of their agreement “have been executed.”

“The commission would not have the power to determine the contractual claim that arises from the binding agreement or to determine to award an appropriate remedy in this matter,” the decision said.

Ultimately, the FWC dismissed the application.