PwC wins against disgruntled accountant who wanted to nullify settlement

Background of the case

The worker had originally worked for the firm's Malaysian office before successfully obtaining a work visa and transferring to the New Zealand office in January 2019. However, by 2020, an employment relationship problem had arisen.

In July 2020, the parties entered into a written settlement agreement which contained a full and final settlement clause. The worker's employment subsequently ended, and they returned to Malaysia.

Nearly three years later, in 2023, the worker filed an application with the ERA, appearing to pursue a personal grievance claim and alleging that the employer had prevented them from securing new employment.

Worker’s claim and requests

The worker sought several outcomes from the ERA:

1. "Total nullification and voidance" or "cancellation" of all documents between themselves and the employer, including the employment agreement and settlement agreement.
2. The ability to pursue a personal grievance claim against the employer.
3. Investigation into alleged misconduct they had been accused of.
4. Explanation to potential employers about what had happened.
5. Monetary compensation for damages inflicted.

The worker claimed that other employers feared hiring them because of the former employer's actions. They also expressed concern about a "hidden barrier" preventing them from obtaining new employment.

At the investigation meeting, the worker gave evidence about being invited to interviews but then suddenly being told their applications could not proceed, without being given a reason why.

The worker also mentioned an incident where her phone had been stolen, and someone had used it to ask for a loan from the employer's Malaysian office while impersonating her. The worker expressed concern about how to explain to prospective employers how her employment ended without breaching the settlement agreement.

The employer's response

The employer raised several points in response to the worker's claims:

1. They pointed out jurisdictional and evidential problems with the worker's claims.
2. They denied breaching the settlement agreement.
3. They stated that the available evidence did not support a claim to cancel the agreements.
4. The employer maintained that they had not received any enquiries or requests for references from prospective employers of the worker.

The employer also addressed a concern raised by the worker about a reference in the settlement agreement to an employment agreement dated 15 November 2020.

The employer clarified that this was a typographical error, and it should have read 15 November 2018, which was the date of the worker's original letter of offer and employment agreement.

ERA's investigation and findings

The ERA conducted an investigation into the matter, focusing on whether the employer had breached the non-disparagement clause in the settlement agreement. This clause stated:

"Neither party will make any statements to any person or organisation or to the general public that are disparaging or reflect negatively on the other."

After considering the evidence, the ERA found:

1. There was no evidence that the employer had made disparaging statements to others in breach of the agreement.
2. The worker had not provided any relevant evidence to support their claim that the employer had taken actions or made disparaging statements to others.
3. The ERA could not discount that the worker's own communications, actions, work experience, or suitability for employment might have been factors in their inability to obtain comparable employment.

The ERA member stated: "Even if a breach had been established, there is no apparent basis for cancelling the agreement, and no other available remedies are sought."

Conclusion and implications

The ERA concluded that:

1. The worker remained unable to pursue a personal grievance claim against the employer due to the settlement agreement.
2. There was no evidential basis for finding that the employer had breached the non-disparagement clause of the settlement agreement.
3. The worker's application to void, cancel, or otherwise set aside their employment agreement or the settlement agreement was dismissed.

The ERA member emphasised: "While it is clear [the worker] now regrets entering into a settlement agreement with [the employer] in which they agreed to resolve all employment matters, the settlement remains binding unless or until both parties agree otherwise, which is not the case here."

This case serves as a reminder of the binding nature of settlement agreements and the importance of fully understanding the implications before entering into such agreements.

It also highlights the need for clear evidence when making claims of breaches or seeking to nullify previous agreements.

The ERA's decision underscores the principle that: "To disparage is to bring into discredit, degrade or speak of critically. There is no need for the comment to be untruthful or fabricated."

This case provides valuable insights for both employers and employees about the long-term implications of settlement agreements and the importance of maintaining professional conduct even after employment has ended.

It also demonstrates the ERA's approach to claims made long after employment has ended and the high threshold required to set aside settlement agreements.