Case shows why a 'dispute settlement clause' in employment contracts is crucial
A recent Fair Work Commission (FWC) has highlighted the importance of a dispute settlement clause in an employment contract after an employee alleged that he had not been paid his bonuses.
The employee filed the application before the FWC. The latter told him that he should attach the instrument or other written agreement that had the dispute resolution procedure, but he failed to comply.
The FWC noted that it was important for him to “identify the term of the contract that provides a procedure for dealing with disputes between the employer and the employee” as it would determine the settlement of their issues.
The employee emphasised that he had “no involvement” in making the contract. The employee wrote:
“You will need to ask [the employer] about their contract I had no involvement in its making. As far as I can see there is no such dispute resolution clause included.” (sic.)
When the FWC asked for a basis again, the employee replied:
“I’m sorry [name deleted] but this response is a joke. You’re tell me the commission can’t help me because the employer who wrote the contract ommited (sic.) a clause yet the ownus (sic.) is on me to provide this to you?????
Please explain this to me!
Makes absolutely no sense.”
In its decision, the FWC enumerated the exceptions when it can deal with a dispute, stating that:
The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4) [of the FW Act], unless:
(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or
(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.
In dealing with a dispute, the FWC must not exercise any powers limited by the term.
If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.
The FWC also noted that it “may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion.” It clarified that it may deal with a dispute only on application by a party to the said dispute.
As to the employee’s case, he conceded that there is no dispute settlement clause in the contract that he was able to provide. When the FWC reviewed the terms, it confirmed that there was no such provision.
The FWC ruled, “In the absence of a term of a contract of employment or other written agreement that provides a procedure for dealing with disputes, the application has no reasonable prospects of success.” Thus, the FWC dismissed the employee’s application.
