Commission explains rules of 'binding agreement,' 'release terms'
The Fair Work Commission (FWC) recently dealt with an employer’s attempt to strike out the unfair dismissal application of one of its workers.
Yun Zhong Xie worked for CB Ideal Tapware Pty Ltd. Xie filed for unfair dismissal, and after a while, the employer filed an application to strike out.
The latter’s application was based on the argument that a legally binding settlement agreement was in place when the employer, through its solicitors, accepted the terms of a settlement deed on 1 June 2023. It claimed that the acceptance came after prior attempts at mediation with a member of the Commission.
The FWC found that Xie did propose a settlement for his unfair dismissal claim during the conciliation process on 25 May 2023 with a Commissioner. However, at that time, no settlement was reached for two main reasons.
First, the employer did not agree immediately and instead requested a seven-day period to consider the proposal. Second, the terms of Xie's offer after the conciliation were the “standard terms set by the Commission itself, not Xie.”
The FWC said the terms were “not fully agreed upon” by Xie when he initially offered to settle for a specific amount.
Not by the worker’s terms
Based on the circumstances, the FWC said it was evident that not all of the conditions stated in the proposed settlement agreement, which was prepared by the Commission after mediation, matched Xie's terms for resolving the matter. It said the terms regarding the amount of compensation were in line with his expectations, but the terms regarding the release were not.
“For a binding settlement agreement to exist, there needs to be a relevant meeting of minds on contractual terms. As the Commission’s terms which attached to the settlement sum had not been agreed by Xie when he offered to settle for that sum, they were incapable of forming a contract that represented a mutual meeting of minds,” the FWC explained.
“Release terms are [also] fundamental terms of a settlement contract. They reflect the legal rights (if any) that are agreed to be cast aside and/or retained in return for the primary settlement terms (such as a settlement sum). They represent an integral part of the bargain.”
HRD previously reported about the extension of a worker's unfair dismissal application after a registry staff member of the Commission advised him to file a different one.
Employer believed in good faith
In its decision, the Commission noted that the employer genuinely believed that accepting the Commission’s deed on June 1, 2023, would settle the matter.
It said the employer “had valid reasons for this belief” since they were not informed by Xie or the Commission about his disagreement with the release terms.
It became apparent much later that the employer only became aware of Xie's email to the Commission on May 30, 2023, when the former mentioned it in his email to the employer's solicitors after almost a month.
“As no binding settlement agreement exists, the unfair dismissal application remains before the Commission. The employer’s strike-out application is dismissed,” the FWC concluded.
