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Deal or No Deal? – “Buyer’s Remorse” Cannot Undo Settlements (Fair Work Commission)

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Recent cases (unfair dismissal and general protections) before the Fair Work Commission have explored the notion of “buyer’s remorse” in regards to undoing settlement agreements reached during conciliation.

Once a claim is lodged with the Fair Work Commission – e.g. an unfair dismissal claim (F2 Application) or a general protections claim (F8 or F8C Application) – the Commission will hold a conciliation conference, if the parties agree. During this conciliation conference, each party can negotiate in an informal but rigorous manner and explore the possibility of reaching an agreed settlement. Now the question stands, if a settlement agreement is reached at conciliation, does either party have the right to challenge and undo the settlement agreed upon?

There have been three recent cases in the Fair Work Commission where the employee has challenged the settlement reached at conciliation. In one, the deal was undone and in the other two, the employee was held to the terms of the settlement that he had signed.

When will a deal be undone?

In Tao (Tara) Zhang v Spring FG Accounting Pty Limited,[1]  the employee and employer reached an “in principle” settlement on the day of the conciliation conference. The conciliator sent both parties an email confirming settlement had been reached and reminded the parties to finalise, sign and exchange a settlement agreement.

The employee’s solicitor then sent a proposed “Deed of Release” (the document recording the terms of the deal) to the employer’s solicitor. This version for the deed contained a broad “mutual release” clause which would have operated so that both parties released the other from all claims relating to the employment and the termination (i.e. a full release).

The employer sent back some amendments to the deed including one limiting the release only to claims relating to the unfair dismissal allegations. The employer did not want to release the employee from her post-employment contractual obligations. The employee argued that the employer’s one-sided release had not been discussed or agreed upon during the conciliation and the employee insisted on a “customary full release”. It is importantly noted that standard Fair Work Commission Deeds of Release (i.e. Terms of Settlement) contain standard mutual terms such as mutual confidentiality, mutual non-disparagement and a mutual non-release.

The matter erupted into a dispute about what was said by whom at the conciliation conference. The employee’s lawyer asked the FWC to set the matter down for arbitration on the basis no agreement had been reached. Commissioner Bissett then had to decide whether the settlement stood or the matter should be referred for arbitration.

The decision Commissioner Bissett looked at the notes made by the lawyers during the conciliation conference and found that there was no evidence that the scope of the mutual release (one way or the other) had been discussed or agreed. The Commissioner held that there had not been a “meeting of the minds”, so there could not be a binding agreement. This meant the unfair dismissal application remained unsettled and so it was referred to arbitration.

“Buyer’s remorse” not an excuse to undo unfair dismissal settlement

In Michael Souter-Robertson v Achieve Corporate Services Pty Ltd,[2] the parties had not reached an agreement in the initial conciliation conference and the parties were directed to file materials for a listed arbitration. The matter was listed for arbitration by Deputy President Asbury, who listed the matter for a secondary conference on 14 June 2016, prior to proceeding with arbitration. This was done in hopes of allowing the parties another opportunity to explore options for resolution to resolve the matter. The parties reached an in-principle agreement at this secondary conference and Deputy President Asbury sent out the terms of settlement to both parties.

On 1 July 2021, the Applicant’s representative wrote to Deputy President Asbury indicating,

Upon careful consideration of his position, the Terms and the evidence, the Applicant has decided that he is unwilling to accept the Respondent’s offer of settlement and would like the matter set down for hearing. While we have not previously encountered a similar situation and are therefore uncertain of procedure, in the circumstances of Deputy President Asbury presiding over the Conciliation Conference, the Applicant has instructed that we make application to the Registrar for the hearing to be conducted by a different Commissioner.”

The Applicant’s representative did not inform the Respondent’s representative of their position. Given the dispute between the parties, the matter was referred to Deputy President Gooley to determine whether there was a binding agreement to settle the unfair dismissal claim and thus, the Commission has the power to dismiss the application as it has no reasonable prospects of success.

Deputy President Gooley found that there was in fact a binding agreement to settle the unfair dismissal claim and upheld that the Applicant should not be permitted to resile from the agreement made because he had “buyer’s remorse.”. Deputy President Gooley also highlighted that both parties were represented at all times, indicating the importance of legal representatives advising their clients regarding the binding nature of settlement agreements.

In Chris AKA Christopher Lawless v Australasian Association of Philosophy,[3] the employee had signed the settlement document and applied to the Fair work Commission to undo his settlement and for a certificate to be issued in order to pursue his general protections claim. The reasons the employee gave as to why the settlement should be undone included that he was suffering from post-traumatic stress disorder; the employer was represented while he was not; he was not properly prepared for the conciliation conference; the Commissioner overseeing the matter had provided misleading information about the cost of taking his matter to the Federal Court and there was insufficient time for him to consider his position.

The employee had lodged his claim with the FWC and then the employer raised jurisdictional objections which were heard by Commissioner Platt. After the jurisdictional hearing on 4 March 2021 and before the Commissioner decided those issued, he invited the parties to participate in an “off the record” conciliation conference with him.

An “in principal” agreement was reached on 4 March 2021 and the matter adjourned until the next day. On 5 March 2021, the employee confirmed to Commissioner Platt that he had received a copy of the deed that the employer’s lawyer had prepared overnight. He summarized it and advised that he was of sound mind and agreed to settle his claim on the terms in the deed. He provided his ex-employer with a signed copy on 8 March 2021. However, the employee failed to lodge the paperwork to discontinue his claim. When the Commissioner’s associate prompted him to do so on 21 April 2021, he argued the settlement was not binding and he wanted to proceed with his claim.

Commissioner Platt made a decision responding to the employee’s arguments and concluded that the employee had not been pressured or rushed during the Commission proceedings; he was of sound mind; and he had indicated that he correctly understood the terms of the settlement he was entering into. Commissioner Platt said that “buyer’s remorse” was not an appropriate basis to undo a properly founded settlement. Commissioner Platt refused to issue a certificate for the Federal Court and closed the Commission’s file.

Key Lessons for Parties

These cases serve as a caution to parties that any in-principle agreement reached during conciliation conferences at the Fair Work Commission (and in other tribunals, commissions or courts), may be held to be binding and they cannot be undone. Nevertheless, it is important to utilise the conciliation conference and address all necessary issues, such as specific terms of settlement which pertain to the agreement. Aforementioned, the parties should discuss the Deed of Release in the conciliation conference and ensure there is an agreement in regards to any non-standard terms that either party may wish to incorporate (i.e. one-sided release, any post-employment obligations or restraints of trade).

If you are participating in a conciliation conference at the Fair Work Commission, make sure that you are prepared and that you understand the terms that you will accept and can communicate these clearly. These cases demonstrate the importance of obtaining proper legal advice and potential representation through the aid of lawyers/paid agents/representatives before making a decision and accepting a deal. You may ask permission from the Fair Work Commission (and in other tribunals, commissions or courts) to hold the file open for a few days while you obtain the necessary legal advice regarding the offer put forward. Taking these steps will ensure that parties are making the most informed decision as undoing settlement agreements is evidently challenging.

You should get advice, be professionally represented, your welcome to get free advice from us call 1800 333 666


[1] [2021] FWC 14.

[2] Michael Souter-Robertson v Achieve Corporate Services Pty Ltd as Trustee for Achieve Cleaning Services Trust T/A Achieve Corporate Services [2016] FWC 5166.

[3] [2021] FWC 2832.

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