Is a “gentlemen’s agreement” enough to settle an unfair dismissal dispute?


Is a “gentlemen’s agreement” enough to settle an unfair dismissal dispute?

An employee has failed to have an unfair dismissal matter listed for arbitration after the FWC found the issue was settled when the parties shook hands in a “gentlemen’s agreement.”

An employee has failed to have an unfair dismissal matter listed for arbitration after the FWC found the issue was settled when the parties shook hands in a “gentlemen’s agreement.”

Robert Badcock’s application for unfair dismissal and a significant payout couldn’t be resolved by a phone call with a Fair Work Commission (FWC) Staff Conciliator, or through participation with his former employer in a  FWC instigated directions conference or Member Assisted Conciliation (MAC). 

Dispute over agreement being reached

All attempts at reconciliation failed at a conference to resolve the unfair dismissal claim.  However, what subsequently arose was a dispute as to the events which followed the conference. This included a meeting between the parties on 16 September 2018, followed by various email exchanges. In particular, there was a dispute as to whether a binding agreement to resolve the unfair dismissal application was reached between the parties.

Two days later, the Motor Trade Association of South Australia (MTA), on behalf of Motor Search, advised the Commission that the parties had “reached an in principle settlement agreement”.  However, after being asked in an email for confirmation of this by the Commission, Mr Badcock advised that the matter had not been resolved. With consent of the parties, a further MAC was conducted on 4 October 2018, but the unfair dismissal matter was not resolved.

On 8 October 2018, the MTA, on behalf of Motor Search, filed an application to dismiss Mr Badcock’s substantive unfair dismissal application pursuant to s.399A(1)(c) of the FW Act on the basis that a settlement had already been reached.

Why the employer wanted the unfair dismissal matter dropped

An informal meeting on 16 September 2018, saw both parties agree to “move on” and shake hands in a “gentlemen’s agreement” for the full and final settlement of all matters for an amount of $8,000. This was agreed to be formalised in a release document, with payment to be made within 24 hours of the release document being signed. Mr Badcock confirmed the agreement by email that day.

However, when Mr Badcock received the deed of release on 17 December 2018, he vaguely raised some concerns with it. This prompted Motor Search to review it, correct the payment terms to be payable within 24 hours, and resend it.

Having received no further communication from Mr Badcock following the reviewed document being sent, Motor Search followed up with him on 25 September 2018. No issues were raised by Mr Badcock then about the deed of release until the matter was re-listed before the Commission.

A “done deal” not done so well

Motor Search contended that the initial acceptance of their offer by Mr Badcock on 16 September 2018 was an unqualified acceptance of the agreement. According to Motor Search, Mr Badcock failed to challenge the terms of settlement, other than the payment term,  until much later on when, it says, he sought to “undo” the binding agreement.

They regarded the 16 September 2018 discussion as a “done deal” that was “still on”. This was also consistent with the notion that the parties would “move on” as stated immediately following that discussion.

Commission’s findings

The Commissioner sided with the employer, finding that the parties had entered into an agreement on 16 September 2018 that was intended to be immediately binding. Therefore, the discretion in s.399A to dismiss the unfair dismissal matter applied. As per the informal agreement, $8,000 was due and payable by Motor Search to Mr Badcock. 

Read the judgment

Robert Badcock v N & HM Cooper Motor Search (SA) & Car Clearance Centre (SA) T/A Motor Search [2018] FWC 6978
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