Set in stone: employment settlements that are signed by a mediator

Where terms of settlement are signed by a mediator pursuant to s149 of the Employment Relations Act 2000, they are final and binding.  Two recent cases in the education sector demonstrate this from different perspectives: an employee seeking to overturn an agreement reached at mediation, and an employer seeking repayment of a debt due by an employee.

In Shaskey v Chief Executive of Manukau Institute of Technology, Mr Shaskey filed a claim seeking interim reinstatement in the Employment Relations Authority.  A record of settlement had earlier been agreed in mediation and signed by a mediator under section 149 of the Employment Relations Act.  Mr Shaskey sought to set aside the record of settlement, alleging mediator bias and incompetence and claiming that he was incapacitated during the mediation.

The Authority held that Mr Shaskey’s application lacked legal foundation because he had signed his consent to the settlement and it was properly executed by the mediator under section 149.  It said that Mr Shaskey’s efforts to reopen the matter had led him to breach the Employment Relations Act, as a settlement under section 149 can only be put before the Authority for enforcement purposes.

Interestingly, the Authority dismissed Mr Shaskey’s claim under clause 12A of Schedule 2 of the Employment Relations Act.  This is a relatively new provision which allows the Authority to dismiss any proceedings that it considers to be frivolous or vexatious.  This clause was used, despite the Authority noting that Mr Shaskey had been earnest and sincere in bringing his application.

The case of Rotorua Girls’ High School Board of Trustees v Simons is a salutary lesson for parties to ensure that all matters are settled between them before signing settlement terms which say so.

Mr Simons owed Rotorua Girls High School a debt of $4,097.22, for an advance salary payment made to him.  Separately to this, he had raised a personal grievance relating to other matters that was settled by a mediation process.  A record of settlement was signed by the parties and certified by the mediator under section 149.  In parallel to this, the school had sought to recover the sum it had advanced to Mr Simon, but there was no mention of this debt in the record of settlement.

The school then withheld the compensation it had agreed to pay in the record of settlement, because Mr Simons was not engaging with it about the debt due.  Mr Simons obtained a compliance order from the Employment Relations Authority, requiring the School to pay him the agreed compensation.  In this (first) determination, the Authority considered that a debt was owed but because no counterclaim had been brought, held that it was unable to make orders for repayment.

Apparently picking up on this comment the School then brought a claim against Mr Simons.  This was declined by the Authority because the parties had signed a record of settlement in “full and final settlement of all matters arising out of the employment relationship” which had been certified by a mediator.  The Authority noted that there had been discussions between the parties about the sum due prior to the record of settlement being signed, so it had become a matter “arising from the employment relationship” for which full and final settlement was reached.

While the Authority considered that Mr Simons had obtained an unjust enrichment by refusing to pay the monies owed, the School had regrettably missed the opportunity to obtain repayment from him when it entered into the record of settlement.  As those settlement terms had been signed by a mediator pursuant to s149, they could not be re-opened by the Authority.

(The Authority determinations noted in this summary can be accessed via the Department of Labour’s website.)

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