FWC examines whether comprehensive settlement bars subsequent dismissal claims
The Fair Work Commission (FWC) recently dismissed an unfair dismissal application after finding that the worker had already reached a binding settlement agreement with his employer.
The case arose when the worker applied for an unfair dismissal remedy but the employer argued that a previous settlement had resolved all employment-related disputes between the parties.
The worker acknowledged that a settlement agreement existed but claimed the employer had not fulfilled the agreed terms, arguing this justified continuing with the unfair dismissal proceedings.
The employer provided proof of payment and argued that the settlement agreement covered all potential claims arising from the employment relationship.
The worker initially applied for an unfair dismissal remedy naming the wrong company as the respondent. That company objected on the basis that it was not the worker's actual employer, explaining that the worker was employed by a related corporate entity instead.
The worker subsequently sought to substitute the correct employer as the respondent in the proceedings, and on 9 June 2025, the FWC granted this request.
After the substitution was made, the original company wrote to the FWC stating: "Please find attached the Deed of Release and Settlement for this matter. We understand this matter to have been finalised in February 2025."
The company attached a settlement document and a certificate from the Queensland Industrial Relations Commission (QIRC) relating to conciliation of employment-related claims.
The certificate indicated that the parties had reached agreement with terms enclosed in a sealed envelope, consistent with Queensland rules requiring settlement agreements to be stored securely.
The FWC found this arrangement did not prevent parties from providing copies of settlement agreements to support dismissal applications based on existing releases.
The settlement agreement was entitled "Deed of Release and Settlement" with the worker and the employing company as parties.
Despite a minor spelling variation in the company name within the settlement document, the FWC found this immaterial given the context and consistent representation throughout the proceedings.
Clause 2 of the settlement agreement provided a broad release stating:
"The parties agree the payments described in paragraph 1 above represent full and final settlement of all matters, disputes, or other causes of action whatsoever, arising out of the employment relationship, that exist between them now, or may exist in the future, save for any actions protected by statute."
This comprehensive language covered virtually all employment-related disputes between the parties.
The FWC found that unfair dismissal claims do not fall into the category of "actions protected by statute" and are capable of being released by such broad settlement clauses.
The settlement agreement therefore covered the unfair dismissal claim that was the subject of the current proceedings before the FWC.
The worker wrote to the FWC acknowledging the settlement agreement but raising compliance concerns:
"I confirm that a settlement agreement was reached between the parties. However, I believe the other party has not fulfilled the agreed terms. We have attempted to resolve the issue by email, but the other party stopped responding before the matter was resolved."
The worker argued there was no independent third party who could verify whether the employer had complied with the settlement terms.
He stated: "In light of these circumstances, I maintain my position to continue with the proceedings before the Fair Work Commission." This position suggested the worker believed non-compliance with the settlement justified pursuing the unfair dismissal claim.
In response, the employer provided proof of payment to the worker, demonstrating compliance with the financial terms of the settlement agreement.
The FWC noted that it has no power to enforce settlement agreements, stating that enforcement "should be done via the courts" rather than through the Commission's unfair dismissal jurisdiction.
The FWC wrote to the parties outlining its preliminary view that if the settlement agreement covered the claims in the proceedings, then continuing to pursue the application would be "frivolous and vexatious" and the application would have "no reasonable prospects of success."
This principle was established in case law setting standards for when applications should be dismissed due to lack of merit.
The worker was given an opportunity to provide written submissions addressing whether the settlement agreement discharged the claims and why the application should not be considered frivolous or lacking reasonable prospects.
The worker's response focused on compliance issues rather than challenging the scope of the settlement agreement or its legal effect.
The FWC found that it was "not in dispute that the parties reached a settlement agreement" and that the worker had not contested the terms provided by the employer.
The Commission concluded that "the settlement agreement covered the claims the subject of these proceedings" and therefore "the Application is rendered frivolous and vexatious, and the Application has no reasonable prospects of success."
Under section 587 of the Fair Work Act 2009, the FWC has discretion to dismiss applications that are frivolous, vexatious, or have no reasonable prospects of success.
Having found that the settlement agreement covered the unfair dismissal claim and rendered the application without merit, the FWC exercised this discretion to dismiss the worker's application.
The decision reinforces that comprehensive settlement agreements can effectively bar subsequent unfair dismissal claims, even where workers dispute compliance with settlement terms.
