Settlement Agreement

Settlement Agreements offer employers and employees the opportunity to bring finality and closure to a dispute or disagreement.

The big advantage to employers is in avoiding significant legal costs and the stress involved in the preparation and presentation of their defence to an Authority Hearing. Given that the onus of proof is always on the employer (employees only need to complain) settlement agreements can be of strong benefit to end unpleasant differences.

Settlement Agreements can provide a solution to a dispute that is about to be tabled and negotiations can be held 'without prejudice' (preserving both parties position before the negotiations start) and remain confidential.

In a situation where the employer’s processes might not stand close scrutiny by a judge and a Personal Grievance has been filed based on a flawed process, then a settlement agreement can provide a resolution. The agreements include clauses such 'full & final settlement', 'confidentiality', no disparaging comments and the like. Be aware, nobody goes to court with any degree of certainty. The effect of this is that even where employers have erred, the case could cost the employee significant fees if the finding isn't in the employees favour. Another risk for the employee is, even where the adjudicator (Member) determines that while the employer is at fault, the contribution of the employee is so significant to - say the dismissal - the costs outweigh the award. Advised properly the employee might be as keen to settle as the employer.

If there is a consideration involving money a strong incentive for the employee is that such money can be 'tax free' if paid and accepted under s.123(1)(i) of the Act.

When drafted correctly settlement agreements are enforceable and binding to the parties and it is recommended the parties obtain the 'sign off' and advice of a Mediator from the Department of Labour. This can be arranged without a formal Mediation taking place.