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This information is part of a series of resources for workers representing themselves in conciliation conferences (for example, in the Fair Work Commission, South Australian Employment Tribunal, Australian Human Rights Commission, etc.) Please read our previous factsheet with information about conciliation conferences here: https://wwcsa.org.au/resources/conciliation-conference-information/.
What are ‘Terms of Settlement’?
If parties participating in a conciliation conference come to an agreement, the conciliator (or the parties themselves) will draft a ‘Terms of Settlement’ document. This document is sometimes also called a ‘Settlement Agreement’, ‘Deed’ or ‘Deed of Release’. It outlines what the parties have agreed on to resolve the dispute or issue.
Sometimes, employers ask employees who have resigned or been dismissed to sign a similar document known as a ‘Separation Agreement’ or ‘Severance Agreement’.
Once both parties sign the document, it becomes a binding contract. You should carefully read and get advice on the terms before signing because you may be giving up important rights in the future.
What are some examples of terms?
The terms (also known as clauses) will depend on what the parties have agreed on to resolve the matter.
For example, if your employer agreed to pay you for the wages you lost after being dismissed and out of work for six weeks, the document can include a payment term, such as:
‘The Respondent [ie the employer] will pay the Applicant [ie you] an amount of $5,000, as an Employment Termination Payment, within 7 days of the parties signing this document.’
Alternatively, if your employer agreed to return you to your previous job, the document can include a reinstatement clause such as:
‘The Applicant will be reinstated at the Respondent’s business from [insert date] 2024 as a [insert job] , for thirty (30) hours per week on a permanent part-time basis, noting that there is no break in continuity of employment.’
If your employer agrees, you can also request a reference or at least a statement of service and record it in the following terms:
‘Within 14 days of the Applicant and the Respondent signing this document, the Respondent will provide the Applicant with a statement of service that:
Terms to watch out for!
Release or mutual release
Release clauses prevent both parties from making any more legal claims in the future against each other.
Case Example:
Sara was advised that she is eligible to make both an unfair dismissal claim in the Fair Work Commission (FWC) and an underpayment claim in the South Australian Employment Tribunal (SAET). Sara makes an unfair dismissal claim first because she only has 21 days to make it, whereas an underpayment claim has a longer time limit of 6 years.
In the FWC conciliation conference, Sara and her employer agree to settle the unfair dismissal issue if the employer pays Sara 10 weeks’ compensation. After the conference, Sara receives a copy of the Settlement Agreement, which includes the following release clause:
‘On the Respondent complying with the payment clause, the Applicant releases and forever discharges the Respondent from any liability past, present or future from all claims, suits, demands, actions or proceedings arising out of or connected with the Applicant’s employment with the Respondent, including but not limited to the cessation of the employment.
The Respondent releases and forever discharges the Applicant from any liability past, present or future from all claims, suits, demands, actions or proceedings arising out of or connected with the Applicant’s employment with the Respondent, including but not limited to the cessation of the employment.
Nothing in these terms of settlement affects any claims, suits, demands, actions or proceedings the Applicant has or may have under statute, an industrial instrument or common law for a work-related injury, illness, disease or death, or under superannuation legislation.*’
*Please note that by law, parties cannot contract out of workers compensation and superannuation claims.
If Sara agrees to the above clause, then she cannot make an underpayment claim in the future. To protect her underpayment claim, she should have asked for a ‘carve out’ clause to make an exception for the underpayment claim under the release clause. For example, the third paragraph could be amended to:
‘Nothing in these terms of settlement affects any claims or actions the Applicant may have at any time
Confidentiality and non-disparagement terms
Confidentiality terms require parties to keep some or all details of the matter confidential, as part of settling the matter. Such details can include: the amount that the Respondent will pay to the Applicant, details of the alleged conduct of the parties, the entire settlement agreement, etc. These terms are also known as non-disclosure agreements (NDAs).
A confidentiality clause can look like:
‘The Applicant and the Respondent will not disclose the terms of this agreement to anyone other than as required by law or to legal and/or financial advisers.’
Non-disparagement terms require parties to not talk speak badly about each other. An example of this is:
‘Neither the Applicant nor the Respondent will disparage or denigrate each other.’
Confidentiality and non-disparagement clauses can be appealing to workers to protect their privacy and reputation and to negotiate higher compensation. However, these clauses also have the effect covering up an employer or perpetrator’s poor conduct and silencing a worker that has experienced harm in their employment, especially in cases of sexual harassment, discrimination and bullying. Thus, these clauses can perpetuate a toxic workplace culture that addresses problems mainly through compensation and NDAs rather than through accountability, training and strong policies which could lead to lasting cultural change.
It is important to note that confidentiality and non-disparagement clauses are not standard, even if they are commonplace. You do not have to agree to these terms if you do not want to. However, conciliations, mediations and settlements involve negotiation, so you should think about what you are and are not willing to compromise on.
What happens after you sign a settlement agreement?
Once a settlement agreement has been signed (ie executed) by both parties, it becomes a binding contract. If there are clauses that require timely actions by the parties, and if a party does not comply, then you can seek to enforce the contract (eg a payment term that states the Respondent should pay the Applicant within 7 days of signing the agreement).
Importantly, do not file a Notice of Discontinuance to discontinue your application until the Respondent has complied with such terms.
Remember, if you are unsure about the terms in a settlement agreement or deed, you should get legal advice before signing it.
Contact the Working Women’s Centre on 08 8410 6499 to organise a legal advice appointment with one of our lawyers.
