April 2017 Update – Mediation and Records of Settlement


This month we address two recent Employment Court judgments concerning mediation and compliance with s.149 records of settlement.

The first judgment is Lumsden v Skycity Management Ltd [2017] NZEmpC 30.  On the facts, the parties had been to mediation and signed a record of settlement.  The judgment records that this document included the following clauses: (at [8])

“…The recorded reason for the end of the employment relationship by Sky City Food & Beverage, for the purposes of seeking new employment, shall be that of resignation by David Lumsden.”

“Sky City Food & Beverage and David Lumsden agree that no disparaging comments will be made by either party about the other party. This includes no disparaging comments to past, existing or prospective staff, prospective employers, internal & external stakeholders or to the general public. For purposes of clarification this includes no disparaging comments on social media sites.”

“David is welcome to apply for any future employment opportunities that may arise at Sky City.”

The judgment also records that:  “[30] Despite agreeing that Mr Lumsden was welcome to apply for future jobs within the company, immediately after the agreement was signed and Mr Lumsden’s resignation had taken effect, a note was entered on Skycity’s human resources computer system. In the tick-box entitled “Would you re-employ?” Ms Haines inserted ‘No’”.

And: “[32] …Under the heading ‘Manager Termination Comments’ [on the form], the following notes appeared:

Outstanding performance issues, staff and customer complaints. Not a team player, major attitude change, became very difficult to manage as he wouldn’t follow management’s directions”.

After finding that Skycity had breached the agreed non-disparagement clause, as well as the “welcome to apply” clause, the Court held:

“[48] All of this serves as a salient reminder that terms of settlement must be carefully considered, but once agreed to are binding and enforceable – however unpalatable. I make the obvious point that if Skycity had not wished to be held to various components of the settlement it should not have agreed to their inclusion in the first place”.

A penalty of $7,500 was ordered; 75% being awarded to Lumsden, and 25% to the Crown.

The important point here is that a record of settlement will mean what it says, and must be complied with, even within the employer organisation and in its records.  Here however, the employer seems to have been caught out by (perhaps not uncommon) internal process purporting to override what had been agreed.

Separately, the judgment reiterates that a s.149 record of settlement is a primary vehicle for dispute resolution under the ER Act.  As such, Lumsden was unable, having signed his record of settlement, to pursue an unjustified dismissal grievance on the basis that (he had argued) s.238 prohibited the parties from contracting out of the ER Act by way of the settlement he had agreed to.

The second judgment is Tulloch v Hays Specialist Recruitment (Australia) Pty Ltd [2017] NZEmpC 26.  Here, the issue was the extent of mediation confidentiality per s.148 of the ER Act.  This section provides that any statement, admission or document made for the purposes of the mediation, and any information that, for the purposes of the mediation, is disclosed orally in the course of the mediation, must be kept strictly confidential.

On the facts, an email was sent after the mediation date, but was claimed by Tulloch to be part of “the continuum of mediation”, and so to be confidential per s.148.  The judgment records:

“[10] Mr Greening’s email relevantly stated:

‘Following the mediation last week, I am writing to follow up regarding our attempts to find you work. I made a commitment at the meeting to speak to [a third party] regarding whether they would have you back to work with them and we have now spoken to them about this. Unfortunately, there is no resourcing requirement for your skill set on the [third party] assignment at the moment.

However we currently have two positions available for electricians that your skill set and experience would be suited for and I would be happy to discuss these with you….

Once you have had a chance to think about these options I will give you a call to discuss them.’

The Court held that the email, and the ensuing phone calls which took place, could not be regarded as part of the mediation. This was because the email expressly followed mediation, referred to events that occurred after and outside mediation, there was no reference to the settlement of the personal grievance, and there was no evidence the email or the process referred to was intended to be confidential or without prejudice.

While we could speculate that Tulloch may not have wished the email to see the light of day because it would affect his claim, it is in any event important to remember what is “in” or “out” under s.148 when considering statements surrounding mediation.  This will be a question of fact, and care will be required in considering whether a statement is being made or created for the purposes of mediation.  Express reference as part of making a statement that it is being made for the purposes of mediation, will of course help.

If you would like to discuss anything referred to above, one of our team would be happy to do so.  Either call us on 04 801 5427, or contact us via email:

Paul McBride (Partner) – paul@mdjlaw.co.nz
Geoff Davenport (Partner) – geoff@mdjlaw.co.nz
Tanya Kennedy (Senior Associate) – tanya@mdjlaw.co.nz
Guido Ballara (Senior Associate) – guido@mdjlaw.co.nz
Frances Lear (Senior Associate) – frances@mdjlaw.co.nz

Disclaimer – this newsletter is necessarily brief and general in nature.  You should seek professional legal advice before taking any action in relation to any matter dealt with in this newsletter.  © McBride Davenport James.

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