Binding settlement thwarts unfair dismissal claim

Cases

Binding settlement thwarts unfair dismissal claim

The Fair Work Commission has ruled an unfair dismissal application had no prospect of success as the applicant had agreed to settlement terms with his employer.

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The Fair Work Commission has ruled an unfair dismissal application had no prospect of success as the applicant had agreed to settlement terms with his employer.

Subeg Singh had argued the settlement was not enforceable as his employer had amended the original offer.

However, the Commission found the essential terms of the agreement remained unchanged, therefore it was legally binding.

Facts


Mr Singh was dismissed from employment as a team leader with Sydney Trains in November 2016 following an investigation into two safety incidents in August 2015.

He was dismissed for failing to follow safety policies, procedures and guidelines while working in a safety critical location, causing significant risk of harm to himself, his team and members of the public.

Mr Singh filed an application for unfair dismissal under section 394 of the Fair Work Act 2009.

On 13 February, Mr Singh’s solicitor wrote to Sydney Trains’ solicitor proposing terms of settlement. These included that Mr Singh be re-employed to perform administrative tasks (no track- work).

Sydney Trains replied and added several qualifications about medical assessments, the work environment and the requirement that a deed of release be entered into.

A draft deed of release was provided to Mr Singh. He agreed to settle the application in principle based on the terms in the draft deed. A few minor alterations were made and the Fair Work Commission was advised it could release the dates for the unfair dismissal hearing.

However, by late March, Mr Singh’s original lawyer had ceased to act. Mr Singh was then advised by an industrial advocate who claimed that the matter had not been settled and a settlement meeting was needed.

Sydney Trains refused to meet as it believed the matter had already been settled.

Arguments


The key question was whether there or not there was a binding settlement between Mr Singh and Sydney Trains.

Sydney Trains argued it had reached a binding settlement so the claim should be dismissed under the Fair Work Act. The essential terms of the settlement were agreed, despite the qualifications and amendments. As such, there was a binding contract and Mr Singh could take further action or ask for arbitration due to an unfair dismissal.

Mr Singh argued that the qualifications made by Sydney Trains were in fact a counter-offer that replaced his original offer. As Mr Singh did not accept the counter-offer of Sydney Trains, then there was no agreement to be enforced, he argued.

The law


A High Court case called Masters v Cameron sets out the common law rules of contractual offer and acceptance.

A contract is effective, the High Court said, when:

• All the terms are agreed, even though both parties intend to have it in a different, more detailed form, with no change in effect.
• All the terms are agreed, with no intention to move away from them, but performance is subject to an official document.
• The parties are bound by the agreed terms, while expecting a new contract with new terms.

Section 399A(1)(c) of the Fair Work Act 2009 allows a claim to be dismissed if a settlement has been concluded. Section 587(1)(c) of the FWA allows a claim to be dismissed if there is no reasonable chance of success.

Decision


Fair Work Commission Deputy President Sams considered that “the parties would have hardly agreed to vacate the four days of hearing and the associated and not insubstantial costs involved, if there was not a plain and obvious intention that the matter had been settled ‘in principle’… at least for over a month between the 16 February 2017 acceptance of the applicant’s offer, until 22 March 2017, there was no indication – not even a hint – from the applicant or his solicitor, that the ‘in principle’ settlement was to be rejected.”

DP Sams therefore considered that Sydney Trains showed an intention to be bound by the essential terms of the offer. It had rewritten in a more detailed form that had no difference in effect.

Accordingly, either the first or second category of Masters v Cameron applied and the settlement was therefore legally effective.

Deputy President Sams considered, as the settlement was in effect, that Mr Singh’s application had no reasonable chance of success.

It was dismissed under section 587(1)(c) of the Fair Work Act 2009.

Subeg Singh v Sydney Trains (U2016/12864)

This article was written by Dhruv Saggar.

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