Chandresh Vyas v City of Bayswater

[2020] FWC 4873

[2020] FWC 4873

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Chandresh Vyas
v
City of Bayswater
(U2020/6333)

DEPUTY PRESIDENT BEAUMONT PERTH, 25 SEPTEMBER 2020

Application for an unfair dismissal remedy - application to dismiss under s 587(1)(c).

[1] Mr Vyas made an application to the Fair Work Commission for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth) (the Act) (the original application).

[2] Under s 587(1)(c) of the Act, the Commission may dismiss an application before it if it has no reasonable prospects of success. The respondent to these proceedings, the City of Bayswater (the City) has made such an application. It claims there was a binding settlement agreement (deed) reached between it and Mr Vyas, and therefore the original application must be dismissed, as it has no reasonable prospects of success.

[3] Mr Vyas has objected to the application on the grounds that:

a) the deed was prepared by the City prior to the City meeting with him to notify him of his dismissal;

b) the deed was provided in circumstances where there was no litigation on foot to settle, and therefore the circumstances of this case can be distinguished from others;

c) public policy is such that the unfair dismissal laws are protective of the rights of employees against unfair dismissal and that, in this case, it could not be said that Mr Vyas has abandoned that right in the dismissal process; and

d) Mr Vyas signed the deed under duress.

[4] This decision addresses the City’s application to dismiss the original application.

Background

[5] It was common ground that Mr Vyas had worked as an engineer for the City for a little over 11 years. Mr Vyas gave evidence that from 2018 he had been performance managed, and that on 25 March 2020 he was stood down. 1

[6] On 16 April 2020, Mr Vyas was invited to a meeting at the City. In attendance at the meeting were the City’s Director, and the Human Resources Manager (HR Manager). Mr Vyas states that he was not informed of the purpose of the meeting, and he noted to the HR Manager that he was recovering from an illness. 2 However, Mr Vyas stated that he informed the HR Manager that he was ‘fit enough to sit a couple of hours for a discussion’ about his work.3

[7] Mr Vyas was told at the meeting that his employment was terminated, and, according to Mr Vyas, the HR Manager informed him that his termination payment calculation was in a document attached to the termination letter. 4

[8] Later that day, Mr Vyas made an enquiry to understand how his entitlements had been calculated and made a request for access to his work computer to obtain information. 5 On 17 April 2020, Mr Vyas called the HR Manager and attempted to obtain reasons for the termination of his employment.6 Mr Vyas says he was informed that the decision had been made by the City’s CEO to terminate his employment.7

[9] Mr Vyas said that he received a response from the HR Manager on 17 April 2020 regarding the calculations for the entitlements. 8 However, Mr Vyas appeared to be concerned that he was not being paid out his personal leave or 65 hours of flexi time that he had accrued. Mr Vyas gave evidence that he called the HR Manager (again on 17 April 2020) stating to the effect he had been dismissed, was in shock and suffering emotional trauma, and should therefore be given $5,000.00 for his personal leave entitlement.9

[10] In response to Mr Vyas’ request, on 22 April 2020, the HR Manager emailed Mr Vyas informing him that the City would pay the additional $5,000.00 but only as part of the deed. Mr Vyas said that he was given until 24 April 2020 to sign the deed. 10

[11] Mr Vyas gave evidence that by 22 April 2020 he had not been paid for ‘actual accrued time’ and he insisted on its payment. 11 The request was rejected.

[12] Mr Vyas gave evidence that it was at this stage he realised that for him to have his entitlements released, there was no other choice but to sign the deed. 12 Mr Vyas submitted that the City was aware that he had not signed the deed of his own free will, because the City was not prepared to release his accrued entitlements without signing the deed.13 He stated that he considered he had been unfairly dismissed, but in order to be paid his entitlements he had to sign the deed and tender his resignation.

[13] However, at hearing, Mr Vyas’ evidence was that he understood that he could either accept the termination with four weeks’ pay or sign the deed and get the ex gratia payment.

[14] Mr Vyas stated that on 24 April 2020 he wrote to the HR Manager making it clear that he sought his entitlements under his enterprise agreement only, and he signed the last page of the deed and sent in the resignation. 14 After following up the City for payment, on 1 May 2020, Mr Vyas received his entitlements and ex gratia payment into his account.15

The City’s account

[15] The HR Manager gave evidence that at the meeting on 16 April 2020, the Director of the area in which Mr Vyas worked, informed Mr Vyas that based on an extensive performance improvement process, the City had determined that Mr Vyas was unable to meet the requirements of the position and a decision had been made to terminate his employment. 16 Mr Vyas was further informed that if he chose, he could tender his resignation instead, and he would receive an ex gratia payment.17

[16] The HR Manager stated that Mr Vyas was provided with the proposed deed of settlement to consider and was told to sign and return it within seven days if he wanted to accept the City’s offer. 18

[17] At hearing, the HR Manager responded to Mr Vyas’ assertion at paragraph 8 of his witness statement, that the HR Manager had simply said ‘that the termination payment calculation has been shown in the document attached with the termination letter, and you … need to counter sign and return the paper work for the City to process payment’. The HR Manager gave evidence that he partially agreed with the account, however, he said that he described to Mr Vyas the options he had – namely, his employment was being terminated, or he could otherwise accept the deed and there would be an additional payment and he would need to sign the deed. The HR Manager gave further evidence that he clarified for Mr Vyas that if he didn’t accept the deed, he would be paid out his outstanding entitlements.

[18] Over the course of a couple of days Mr Vyas was said to have made several enquiries. These included a request for calculations for the settlement sum in the deed, a copy of a previous meeting’s minutes that had been conducted by video conference, the opportunity to remove personal information from his work computer, and to collect his belongings. 19 All enquiries received a response.

[19] Mr Vyas further enquired about the balance of his personal leave and asked that he be provided with payslips containing such information – two payslips were provided.

[20] On 21 April 2020, Mr Vyas was said to have requested that his ex gratia payment be increased to include his unused personal leave. 20 This was authorised. The deed was amended to reflect the increase in the ex gratia payment and sent to Mr Vyas on 22 April 2020.21

[21] A further request was received by the HR Manager on 23 April concerning the pay-out of 65 hours of accrued flexi-time. Mr Vyas was informed that this payment had not been approved. 22

[22] On 24 April 2020, Mr Vyas sent an email to the HR Manager; it stated:

…

Please see below for your consideration.

Ex-gracia payment offered to me did not factored approved extra hours (accrued overtime) that I worked on the City’s projects and tasks between 20 January 2020 and 24 March 2020. And therefore I believe that I should get paid for it.

I leave it up to HR and the City to ensure that I get paid for all my entitlement under (EA).

As discussed I hereby enclosed signed deed of settlement and my resignation letter as required under deed of settlement for your consideration. Please let me know other formalities required to be completed by me. 23

Terms of the deed

[23] The recitals of the deed read:

A. The Employee was employed by the Employer on 4 March 2009 as Project Engineer and is currently employed as Project Engineer (“Employment”).

B. It has become apparent there is a misalignment between the Employee’s working style and the expectations of the Employer.

C. The Employee agrees to resign from his Employment in exchange for an ex gratia payment.

D. The Parties have agreed to settle all matters pertaining to the Employment and the Resignation in accordance with the express terms set out in this Deed.

[24] Under the header ‘[S]ettlement’ (cl 2) the follow terms were included:

a) Within seven (7) days of the execution of this Deed, the Employer will make the following payments to the Employee:

i. the amount of $32,146 (gross) as an ex gratia payment. This amount is inclusive of a provision of four weeks’ notice.

ii. the amount of $35,904.28 (gross) in respect of leave entitlements. This amount is inclusive of annual leave loading.

…

c) The Employee agrees that the amounts set out in clause 2(a) include and are in satisfaction of the full amount that the Employer owes the Employee, whether for salary, wages or other remuneration, leave entitlements, payment in lieu of notice, severance pay, or anything else connected with the Employment, and the Resignation.

[25] A ‘Release of Liability’ at cl 3 stated:

The Employee

(a) releases and discharges the Employer, its directors, employees and agents from all liability now and existing or which might but for this Deed arise, in respect of, relating to, or in connection, whether directly or indirectly, with the Employment and the Resignation;

(b) will not bring, commence or seek to enforce any claim, cause of action, suit, demand or right or any proceedings whatsoever in any court, commission or tribunal against the Employer, arising out of, from, in or in connection, whether directly or indirectly, with the Employment or the Resignation;

…

[26] And, at cl 3.4 of the deed, there was a ‘Bar to Proceedings’ header, the content which followed provided:

This Deed may be pleaded by the Employer, its directors, employees and agents against any action, suit or proceeding taken by the Employee or his representatives in respect of the Employment or the Resignation.

[27] The deed also included that ‘[T]he Employee warrants that he has had the opportunity to take independent legal advice as to the nature, effect and operation of this Deed and acknowledges that the Employer relies upon this warranty in the execution of this Deed’.

Consideration

[28] Under s 587(1)(c), the Commission may dismiss an application before it if it has no reasonable prospects of success. A predecessor to this Commission held it had power to dismiss an application for relief from unfair dismissal, on the grounds there was a binding settlement between the parties. 24 In Salisbury v Sigmatek Pty Ltd (Sigmatek),25 the Commissioner observed while the predecessor’s decision was made in relation to earlier legislation there was no reason to find the reasoning did not continue to apply under the Act.

[29] Having considered the evidence and submissions led by both parties, I have concluded the original application is absent of any reasonable prospects of success and, therefore, must be dismissed.

[30] The first reason for this conclusion is that there is no apparent power under the Act by which the Commission may set the deed aside. In Sigmatek, 26 the Commissioner stated:

Even if I formed the view that the Deed had been signed under duress it is not apparent that the Commission could, in any event, remedy that situation to enable Mr Salisbury’s claim for unfair dismissal [to] proceed. An application to set aside a Deed is not a matter to be entertained by the Commission. This is not a matter where the mere existence of an agreement to settle a matter is in dispute. The existence and the terms of the Deed are clear. The Deed has been signed and is legally binding on the parties to it until such time as it is set aside.

[31] The Commissioner reiterated that reasoning in Segran v Certis Security Australia (Victoria) Pty Ltd T/A BRI Security, 27 where it was said:

If it is claimed that the Applicant was coerced into the agreement (although this does not appear to be put in such terms) it is unclear how the Commission can deal with that. To set aside an agreement reached or to claim the agreement is void are not matters, it would appear to me, within the jurisdiction of the Commission.

[32] While the Commission is not reposed with power to set aside a deed of release, it has nonetheless considered whether particular conduct vitiates a deed of settlement. In Sigmatek, the Commissioner considered Mr Salisbury’s argument that the deed in question was not properly made as he was put under ‘duress’ to sign it. When considering the legal term ‘duress’, the Commissioner referred to the decision of Kaufman SDP in Thomas v Logica Pty Ltd (citations omitted), where the Senior Deputy President expressed:

[35] The leading case on duress is Crescendo Management Pty Ltd v Westpac Banking Corporation. In the judgment of McHugh JA, as he then was, at page 46 appears an exposition of what constitutes duress, an exposition that has been consistently adopted and applied since his Honour's reasons were delivered. His Honour said:

...The proper approach, in my opinion, is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.   

In their dissenting advice in Barton v Armstrong [1973] 2 NSWLR 59; [1976] AC 104, Lord Wilberforce and Lord Simon of Glazedale pointed out (at 634; 121):

...in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as illegitimate. Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion.  28

[33] The Commissioner in Sigmatek, thereafter, considered whether Mr Salisbury had been subject to duress, and in doing so considered the factual matrix, with three essential elements in mind:

1. Did Sigmatek put physical, economic of psychological pressure on Mr Salisbury in order to have Mr Salisbury sign the Deed?

2. Did that pressure cause Mr Salisbury to sign the Deed?

3. Did Mr Salisbury have no reasonable alternative but to sign the Deed? 29

[34] In Jiggins v Toll Pty Ltd, 30 a matter involving an unfair dismissal application, the Senior Deputy President similarly considered whether the evidence showed that Mr Jiggens had been subjected to duress regarding the execution of the deed of release, he stated:

[43] When my view of the direct evidence is weighed along with the surrounding evidence, I conclude that the Applicant was not subject to any duress etc in relation to the execution of the deed of release…

[45] There is no evidence that the Applicant was subject to some measure of unconscionable conduct that vitiated the deed of settlement. On the evidence that I have heard, the Applicant knowingly entered into a deed for his financial benefit, and in so doing waived his rights to further action against his employer.

[35] If the Commission is absent power to set aside the deed, the consideration of whether Mr Vyas was subject to duress would appear to be a moot point. However, if the Commission were reposed with that power, the evidence nevertheless is unsupportive of a conclusion that the deed was legally vitiated by such reason, or for the other reasons Mr Vyas has advanced.

[36] The City provided Mr Vyas with the deed on 16 April 2020. The HR Manager gave evidence that at the meeting on 16 April 2020, Mr Vyas was informed he was dismissed, or alternatively he could tender his resignation for which he would receive an ex gratia payment. 31 The deed included ‘Recitals’ that were written in plain English and were as such comprehendible.

[37] Have considered the communication in the meeting on 16 April 2020, and on a fair and balanced reading of the correspondence between the parties, and importantly the deed, it is readily discernible that the ex gratia payment was conditional upon Mr Vyas executing the deed and unconditionally releasing the City from liability with respect to any claims arising out of the cessation of his employment.

[38] There was no indication that Mr Vyas would not receive his entitlements if he did not sign the deed. Mr Vyas knowingly entered into the deed with the City, having had the situation explained to him clearly by the HR Manager, and having had several days to consider the terms of the deed, which were unambiguous. In this respect, the deed included express terms that indicated very clearly its effect once signed. These terms were not difficult for a literate person to understand.

[39] After the meeting on 16 April 2020, Mr Vyas proceeded to negotiate a larger ex gratia payment, securing an additional $5,000.00 to which he otherwise would not have been entitled to, according to the City. That amount, representing unpaid accrued personal leave, was not required to be paid out on termination.

[40] The communications, between Mr Vyas and the representatives of the City, indicate that at all times Mr Vyas was free to choose whether or not to accept the deed. At hearing, Mr Vyas gave evidence that he could either accept the termination with 4 weeks’ pay or sign the deed and get the ex gratia payment. While there may not have been a choice concerning the cessation of Mr Vyas’ employment, that choice was not negated when it came to either accepting or declining the offer proposed.

[41] Mr Vyas was provided with the opportunity to ask questions about the deed and its contents, which he did. All questions asked elicited a response. On signing the deed, Mr Vyas received the amounts stipulated in cl 2 of the deed. He clearly had access to the benefit of the settlement.

[42] While Mr Vyas gave evidence that he had been unwell at the time of being provided with the deed, he had communicated to the City that he was sufficiently fit to participate in the meeting held on 16 April 2020. It is observed that Mr Vyas returned the deed within the period set, having negotiated an increase in the amount of ex gratia payment and having sought detail about the calculations.

[43] As far as it is relevant, I have concluded that there was no illegitimate pressure put to bear on Mr Vyas, such that he was placed under duress. The conduct of the City did not in any way impact upon the enforceability of the deed. As it is, I am of the view, for reasons expressed, that this Commission has no power to set aside the deed in any event. Counsel for Mr Vyas appeared to conveniently avert providing submissions on this point.

[44] Concerning the other grounds advanced by Mr Vyas, all are without merit. However, for the sake of fulsomeness they are addressed in turn.

[45] Whether the City prepared the deed prior to the meeting with Mr Vyas on 16 April 2020 or thereafter is irrelevant. The fact has no bearing on whether this Commission has power to set aside the deed or whether there were factors that vitiated the legal enforceability of the deed. This is similarly the case regarding the contention that there was no litigation on foot and that somehow impairs the legal enforceability of the deed. In Sigmatek, the applicant, Mr Salisbury, signed the deed of releaseat the time of the termination of his employment. The Commissioner concluded that the deed of release or settlement, as signed, was legally binding on the parties to it, until such time as it is set aside. It is evident that the execution of a deed before lodging an unfair dismissal application, does not, in and of itself, nullify the legal enforceability of the deed. The representative for Mr Vyas did not direct this Commission to an authority that opined the contrary.

[46] The pursuit of a public policy argument is somewhat futile in circumstances where the Act clearly permits the dismissal of applications under s 587 – including unfair dismissal applications. In this respect, I note and adopt the reasoning in Australian Postal Corporation v Gorman, 32 where the Federal Court (per Besanko J) stated:

[31] An accord and satisfaction extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement. A valid accord and satisfaction is not a discretionary factor relevant to the subsequent litigation of the original claim; it is an answer to the claim.

[32] It seems to me that the fact of an accord and satisfaction can either be raised under the Act at an ‘interlocutory’ stage and at the final hearing or it cannot be raised at all. As it is a complete answer to a claim there would be no reason why it could be raised at a final hearing but not at a preliminary stage under a section such as s 587.

[33] There is nothing in the Act which suggests that an accord and satisfaction should not be recognised. At a general level the object of Chapter 3 Part 3-2 and the general statements of the manner in which FWA is to perform its functions and the matters to which it is to have regard are consistent with the recognition of an accord and satisfaction. Furthermore, the words of subsection 587(1) are wide enough to include the recognition of an accord and satisfaction. As I have said, a valid and effective accord and satisfaction extinguishes the pre-existing cause of action and continued pursuit of an application based on such cause of action is clearly capable of being considered to be frivolous or vexatious or without reasonable prospects of success.

Conclusion

[47] The deed is an ‘accord and satisfaction’. It releases the City in relation to claims associated with Mr Vyas’ employment and its termination, and operates as a complete answer to the original application. 33

[48] The original application is dismissed, and an order will issue to that effect concurrently with this decision. 34

DEPUTY PRESIDENT

Appearances:

S Farrell of SJF Workplace Advice for the City of Bayswater
P Mullally of Work Claims Australia for the Applicant

Hearing details:

2020:
Perth;
September 10.

Printed by authority of the Commonwealth Government Printer

<PR722692>

 1 Witness Statement of Mr Chandresh Vyas [3].

 2 Ibid [5].

 3 Ibid [6].

 4 Ibid [8].

 5 Ibid [13].

 6 Ibid [15].

 7 Ibid [16].

 8 Ibid [18].

 9 Ibid [20].

 10 Ibid [22].

 11 Ibid [23].

 12 Ibid [24].

 13 Ibid [27].

 14 Ibid [24].

 15 Ibid [25].

 16 Witness Statement of Mr Daniel West [6].

 17 Ibid [6].

 18 Ibid [7].

 19 Ibid [9].

 20 Ibid [14].

 21 Ibid [15].

 22 Ibid [16].

 23 Ibid [17].

 24   Zoiti-Licastro v Australian Taxation Office (2006) 154 IR 1.

 25   [2020] FWC 2, [34].

 26 Ibid [34].

 27   [2020] FWC 4192, [37].

 28   [2003] AIRC 694; (20 June 2003).

 29   [2020] FWC 2, [21].

 30   [2014] FWC 940.

 31 Witness Statement of Mr Daniel West [6].

 32 [2011] FCA 975.

 33   Australian Postal Corporation v Gorman [2011] FCA 975.

 34   PR723102.