The Employment Relations Authority has held that a
settlement entered into at mediation was invalid. An employer was looking at a possible
redundancy situation and entered into negotiations with the employee which
arrived at a settlement with compensation.
During the negotiations the employer mistakenly advised the employee
that no redundancy compensation would be payable if the employee was made
redundant. That was not correct and
under his employment agreement the employee would have been entitled to
redundancy compensation.
The employee later realised that they would have been
entitled to redundancy compensation and sought to set aside the settlement
agreement. They brought the claim in the
Employment Relations Authority and the Authority agreed that, because of the
mistaken misrepresentation by the employer, leading to both parties having a
mistaken view, the settlement agreement entered into was invalid.
The ERA then went on to consider what the employee would
have been entitled to by way of redundancy and found that the settlement
agreement actually paid him more than the redundancy. Therefore although it set aside the
settlement as invalid it did not award any remedies because the employee had
already been paid more than he would have been entitled to by way of
redundancy.
Costs were not awarded to either party because both were
at fault. The employer for misleading
the employee accidentally, and the employee for lodging launching into proceedings
which were not going to bring a better result than they had already achieved.
Alan
Knowsley
Employment
Lawyer Wellington
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