Was worker pressured into signing a Deed of Release?

The Fair Work Commission (FWC) recently dealt with a case involving a worker's allegations of being dismissed from employment.

In this case, the FWC had to navigate through several legal issues, including the validity of a Deed of Release signed by the worker and the potential consequences of dismissing or adjourning the worker's application.

The decision highlighted the importance of considering the objects of the relevant legislation and the potential prejudice suffered by the parties when making procedural decisions.

Background and meeting details

The worker started full-time employment with the employer on 10 October 2022 as an IT Support person. The employment relationship ended on 11 December 2023, with the parties contesting whether the worker resigned or if the employer's conduct amounted to constructive dismissal.

On 11 December 2023, a meeting was held between the worker and the employer's managing director regarding several concerns, particularly an allegation that the worker inappropriately accessed the employer's IT system to check the salary of a new IT coordinator.

The worker denied the allegation, and the managing director advised that the worker's employment would likely end, but he could choose to resign as an alternative to being dismissed. Subsequently, the worker signed a Deed of Release in relation to his alleged resignation.

The employee’s Deed of Release

The Deed required the employer to pay the worker, in addition to their usual employment entitlements and accrued but untaken annual leave benefits, an amount equal to his salary in lieu of the required notice, which was two months' pay before tax.

The Deed contained a one-way release, where the worker released the employer from all present and future claims relating to his employment and resignation. The employer could plead the Deed as a bar to any relevant claim.

While there was no dispute that the worker signed the Deed, he contested its enforceability, arguing that he was forced to sign it.

Submissions and FWC's determination

The worker submitted that his application should not be dismissed, claiming that:

• The Deed was not set out to settle any dispute, as there was no dispute between the parties.
• The meeting and the Deed were set out to end the worker's employment by intimidating/pressuring him to resign and enter a Deed of Release.
• The worker was forced into signing the Deed due to misrepresentations made by the managing director.
• The worker's actions in signing the Deed were due to their post-traumatic stress disorder and the managing director's bullying.

On the other hand, the employer submitted that the application should be dismissed, arguing that:

• The worker had executed the Deed on two occasions.
• The terms of the release were clear, unambiguous, and reflected a clear intention by the parties to be bound by the performance of those terms.
• There was no evidence to suggest that the worker was under duress when signing the Deed.
• The release clause provided that the Deed operated as an absolute bar to any claims, including the worker's current application.

After reviewing the submissions, the FWC determined that the application could not proceed due to the Deed, which was clearly signed by the worker.

The FWC did not have jurisdiction to set aside the Deed, as it was not satisfied that any provision of the FW Act could be relied upon to do so.

Statutory provisions and considerations

The FWC considered various statutory provisions, including:

• Section 587 of the FW Act, which deals with the FWC's power to dismiss applications.
• Section 589 of the FW Act, which provides the FWC with jurisdiction to make procedural and interim decisions.
• Section 336 of the FW Act, which prescribes the objects for the general protections part of the FW Act.
• Section 577 of the FW Act, which outlines the general requirements regarding the performance of the FWC's functions.

The FWC noted that the objects of the general protections part of the FW Act were focused on protecting rights and persons and providing effective relief.

The FWC had to balance these objects with the practical consequences of dismissing or adjourning the worker's application.

FWC’s final decision

The FWC considered the potential prejudice suffered by the parties in the event of dismissing or adjourning the application. It said that if the application were dismissed and the worker subsequently succeeded in having the Deed set aside, they would have to make another application outside the 21-day filing period and seek an extension of time based on exceptional circumstances.

On the other hand, if the application were adjourned, the employer would suffer some prejudice by potentially having to attend further FWC proceedings and incur legal costs.

After weighing all the factors, the FWC decided to exercise its discretion under s.589 of the FW Act to delay the dismissal of the worker's application. It then referred the matter to be taken to court.

This decision allowed the worker an opportunity to seek advice and/or seek to have the Deed set aside by commencing proceedings in a jurisdiction that could determine the validity of the Deed.

Thus, the FWC said that unless it was advised on 29 April 2024 that proceedings had been filed in a court to have the Deed set aside, it would issue a decision dismissing the worker's application without further reference to the parties.