Recently we represented another of our clients in the ERA, with this resulting in a positive outcome enforcing the provisions of a signed settlement agreement.
Many employment disputes are resolved on a full and final basis by the mutual signing of a settlement agreement drafted pursuant to section 149 of the Employment Relations Act 2000. To give these agreements an “enforceable” basis, after both parties have signed, they are submitted to MBIE to have a mediator endorse them.
The provisions of s149 state that; “no party may take further action against the other with respect to the employment relationship and the ending of such – except for enforcement purposes”.
Enforcement purposes generally being limited to a breach of a provision of the settlement agreement by one of the parties.
With respect to the settlement agreement signed between the employee, Ms. Alice Knowles and her former employer (our client) Analytica Laboratories, this contained a standard non-disparagement provision whereby the parties agreed that neither would make negative and disparaging comments about the other.
Disappointingly, after signing the settlement agreement, Ms. Knowles took to social media and made several disparaging comments about her formal employers and manager. The client engaged us to send Ms. Knowles a ‘cease and desist’ letter, including a reinforcement of the settlement agreement. Ms. Knowles was asked to provide an apology to the company to resolve the matter.
However, rather than provide an apology Ms. Knowles elected to send another disparaging message in which she berated the employer for the loss of her employment and continued to make negative remarks about the manager.
As such, the Client requested that we file a Statement of Problem – Breach of Settlement in the ERA on their behalf. The matter proceeded through the ERA with Ms. Knowles electing not to present any evidence in her defense.
As such, the ERA determine that Ms. Knowles had breached the settlement agreement through making negative and disparaging comments about her former employer, ordering her to pay Analytica $2,250 within 28 days and advising that should compliance not be undertaken, Analytica had the ability to refer the matter to the Employment Court who have the powers to exercise it powers under s140(6) of the Act to issue a fine against Ms. Knowles not exceeding $40,000 or issue an order that property belonging to Ms. Knowles be seized by the Court.
While the issuing of the determination (a publicly available record) required Ms. Knowles to make payment to the employer, a future consequence also occurred, this being that the media picked up on the story and widely reported this nationally, see here. This record then stands for longevity as an electronic record of Ms. Knowles’ actions should future employers be seeking to reference check her.
This case proves the value of using legally binding settlement agreements to record the details of the ending of employment, on a full and final basis, and also of the powers available to the employer to enforce compliance if the employee elects to breach these agreements.
The consequences of this case also reinforce that, while having to make a monetary payment to the ex-employer for committing a breach of the settlement may be a suitable remedy, this may pale in significance to now having a permanent public record of the employees’ character available for future employers to see.
Full and final settlement agreements are the preferred manner to record the ending of an employee’s employment where it is believed that some risk may occur with an employee after the final date of employment – and the employer is seeking a higher degree of protection from claims.
Please feel free to contact us if you have a situation where you believe putting a full and final settlement agreement in place would be beneficial.