Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - Deed of settlement executed - Matter dismissed under s.587 at the Commission's initiative

• [1] On 24 March 2025, Mr Ran Zheng (the Applicant) filed an application with the Fair Work Commission (the Commission) for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act). The Applicant alleged he was unfairly dismissed by UA Holdings Pty Ltd (the Respondent) on 4 March 2025.

• [2] The matter was listed for a Directions hearing on 1 May 2025 where the jurisdictional objections raised by the Respondent were genuine redundancy and that the parties had entered a Binding Settlement Agreement which barred the Commission from proceeding with the application. The Applicant contended that the Agreement titled as a "Redundancy Agreement" (the Binding Settlement Agreement or the Redundancy Agreement or the Agreement) was not valid for various reasons and disputed that his dismissal was a genuine redundancy.

• [3] Directions were subsequently issued to deal with the jurisdictional objections and merit.

• [4] Following receipt of the Applicant's submissions on merit and in response to the Respondent's objections, the matter was listed for further directions before the required filing date for the Respondent's merit submissions in reply.

• [5] At the further Directions hearing, the parties were informed that based on their submissions, the Redundancy Agreement subject to the jurisdictional objection was admittedly executed by the Applicant. Consequently, this primary objection will need to be determined at the hearing scheduled for 30 June 2025 before the genuine redundancy objection and merits can be considered.

• [6] The Applicant subsequently sought an adjournment of the scheduled 30 June hearing and provided a medical certificate in support of the request. The Applicant did not agree to the matter being determined on the papers, so the hearing was rescheduled to a date consistent with the advice in the medical certificate. A notice of listing was issued directing the parties that a hearing is scheduled for 4 July 2025 to deal with the primary matter of the Redundancy Agreement.

• [7] On 1 September 2018 the Applicant was employed full time in the position of Factory Director. In this role, Mr Zheng was responsible for overseeing the day-to-day operations of the production facility. On 4 March 2025, the Applicant met with Ms Sophie Shi, the Human Resources Director, and Mr Xiaomeng Wei, General Manager. At the meeting, the Applicant was informed by his General Manager that his employment would terminate by way of redundancy. At the meeting, the Applicant signed a Redundancy Agreement[1] - a binding settlement agreement which provided for a more favourable termination package. The Applicant's employment came to an end on 4 March 2025 on signing the Agreement and he was paid notice in lieu, severance pay, accrued annual leave and the golden handshake payment.

• [8] The Respondent objects to the unfair dismissal application being determined and requests the application be dismissed under s.587 of the Act because a Binding Settlement Agreement was entered.

• [9] The Respondent tendered into evidence two witness statements from Ms Sophie Shi,[2] the Human Resources Director. Ms Shi says that she took the Applicant through the financial package being offered and says that the Applicant read through the Agreement. Two copies were signed by the Applicant, and Mr Wei signed on behalf of the Respondent. Each party retained a copy of the signed Agreement. In her second statement, Ms Shi says that the Applicant did not ask for more time to review the Agreement, he read the document in front of her and did not ask any questions, nor did he state that he did not understand the document. She further denies pressuring the Applicant to sign the document and says that had he asked for more time before signing she would have permitted it.

• [10] The Agreement is an 8 page document. The first page identifies the Parties and is headed "Redundancy Agreement". The second page is a list of contents and page 3 contains the details of the Parties and Background. In the Background in item D it states: "With no admission of liability, the Employer and the Employee have agreed to settle all matters relating to the Employment, the Contract and the Termination on the terms specified in this Release Agreement (Agreement)." Page 4 contains definitions for claim, confidential information, intellectual property, inventions, and on page 5 definitions continue with details of the payment sum to be made to the Applicant, related entity, termination and termination date. Clause 2 (page 5) then contains the substance concerning the obligations of the employer and then proceeds with the balance of the terms.

• [11] Clause 5 (page 6) contains a release by the Applicant to the Respondent from all claims concerning his employment, his contract and termination of employment in consideration of the payment. Claims means any claims under statute, common law or equity that the employee had or has against the Employer, its directors, officers, employees, servants and/ or agents at any time after execution of the Agreement.

• [12] Clause 9 of the Agreement provides that the Applicant agrees that the Redundancy Agreement can be relied on as a bar to any claim arising out of or in connection with the Employment, the contract and/or termination. In addition, the clause provides that the Applicant agreed that he had the opportunity to get legal advice and entered into the Redundancy Agreement fully and voluntarily.

• [13] On 4 March 2025, while the Respondent was processing the payment, Payroll noticed the reference to the payment in lieu of notice did not include the Applicant's car allowance. Payroll also provided an updated annual leave accrual which differed from the estimate earlier calculated for Ms Shi's Redundancy Agreement. Ms Shi says that she corrected the figures on page 5 of the Agreement and addressed typographical errors (i.e. changing the reference from "she" to "he") in clause 8.1 and clause 9.1(a) (page 6 and 7 respectively). She says no other changes were made and the substance of the payment was not altered, rather the payment sum was improved to advantage the Applicant. A copy of the corrected pages was inserted into the Redundancy Agreement and sent to the Applicant. She further says the payments made to the Applicant were consistent with the corrected figures included in the copy sent to the Applicant. No changes were made to the page that contained the Applicant's signature. Both a copy of the original signed document and amended pages document was tendered into evidence.

• [14] Ms Shi says the Applicant contacted the headquarters in China and herself on 6 March 2025 seeking to renegotiate the settlement in the Agreement. She says Mr Zheng advised that the signed Agreement was invalid because the initial calculations were incorrect.

• [15] At no time had the Applicant made an application to a court to challenge the Agreement or seek to set it aside.

• [16] The Respondent relies on relevant authorities where a binding settlement agreement extinguishes any litigation to be taken.[3]

• [17] The Respondent submits that the Agreement is a Binding Settlement Agreement entered into between the parties in relation to Mr Zheng's employment, contract and termination of employment. The release applies to all claims in relation to termination of employment (which includes an unfair dismissal application), and the Respondent complied with its obligations consistent with the terms of the Agreement. The payment made was greater than what was initially agreed to with signatures on 4 March 2025; the original figures were a minor error and with the correction the Applicant was better off.

• [18] The Respondent submits that any argument by the Applicant that the Agreement is void or invalid ought to be rejected because the Applicant entered into the Agreement freely. Further it is not for this Commission but a court of competent jurisdiction to determine whether a Binding Settlement Agreement is invalid or unenforceable.[4]

• [19] Accordingly, the Respondent submits it is appropriate in the circumstances for the Commission to dismiss the Application under s.587 (1) of the Act.

• [20] The Applicant contends that the signed Agreement on 4 March 2025 is invalid because:

• The initial calculations were incorrect.
• He had obtained authority to take leave to go back to China to take his mother to hospital for heart surgery, therefore the meeting caught him off guard and he was in a "trance" or state of shock so he was unable to comprehend what he read. He says he was in a desperate situation.
• He says that he was not given an opportunity to respond to the decision to make his position redundant and he was not aware that he could ask to have a support person.

• [21] The Applicant says he was devastated by being made redundant and did not carefully review the terms before signing the Agreement.[5] The Applicant further asserts his lack of proficiency in English and no reasonable opportunity to seek legal advice means his signature was neither informed nor had he consented to the Agreement.[6]

• [22] During the hearing Mr Zheng added that the Agreement makes no mention of any bar to an unfair dismissal application as there is no reference to s.394 of the Act. He reiterated that he was not given any legal advice and because English is not his mother tongue he did not fully understand the Agreement. Further he says that the Agreement is titled Redundancy Agreement, and on that basis he presumed it only related to the redundancy and not a comprehensive agreement on any other matters regarding his employment or termination of employment. At one point Mr Zheng alleged that his signature was forged.

• [23] Mr Zheng did not contest the witness evidence of Ms Shi or Mr Wei from the Respondent.

• [24] Section 587 of the Act provides as follows:

(1) Without limiting when the FWC may dismiss an application, the FWC may dismiss an application if:

(a) the application is not made in accordance with this Act; or

(c) the application has no reasonable prospects of success.

Note: For another power of the FWC to dismiss an application for a remedy for unfair dismissal made under Division 5 of Part 3 2, see section 399A.

(2) Despite paragraphs (1)(b) and (c), the FWC must not dismiss an application under section 365 or 773 on the ground that the application:

• [25] This matter concerns the question whether a Binding Settlement Agreement was entered into by Mr Zheng and the Respondent - UA Holdings Pty Ltd on 4 March 2025. On 4 March 2025, Mr Zheng was informed that his position would be made redundant. An offer was made to him to pay out severance payment including a golden handshake payment in addition to his accrued entitlements. This offer was reflected in a document titled "Redundancy Agreement" which contains clauses commonly found in a deed of release.

• [26] The Agreement was marked "without prejudice until executed." It was an offer for Mr Zheng's consideration. The conditions deal with property, payment and taxation, releases, confirmation of full and final satisfaction, confidentiality, obligations of non-disparagement, acknowledgement that the employee had an opportunity to seek legal advice and that he entered the agreement voluntarily, that the document is a bar to any claims and a signing page. The document contains Mr Zheng's signature and the signature of the General Manager on behalf of the Respondent both dated 4 March 2025.

• [27] Mr Zheng was a senior member of the management team and the contents in the Redundancy Agreement reflect terms relating to his employment conditions. I do not accept that the Agreement is limited to matters only pertaining to the redundancy payment. I do accept that Mr Zheng was likely taken by surprise by the redundancy announcement, however his own evidence was that he did sign the Agreement and on reviewing the Agreement with his wife at home he noticed the missing amount for his car allowance and he questioned his period of employment. He submits that it was on this basis that he sought to renegotiate the Agreement, further seeking recognition of a longer period of continuous service and asked Ms Shi to amend the Agreement.[7] Ms Shi amended the Agreement with the correct figures including the car allowance, but did not alter the period of employment because the Respondent could not recognise a period of employment with the prior Chinese employer as a period of continuous employment.

• [28] By signing the Agreement Mr Zheng did accept the offer of financial benefits, and the Respondent confirms that the benefits were paid to Mr Zheng and he has kept those benefits. Mr Zheng did not contest this evidence. But on 6 March 2025 in an email to the HR Director, Mr Zheng states that the Agreement was invalid because the initial calculations were incorrect, and he therefore sought to renegotiate the settlement sum in the Agreement. Other than this email characterising the Agreement as invalid for the purpose of renegotiating more favourable terms, there is no evidence that Mr Zheng took any steps to invalidate or set aside the Redundancy Agreement.

• [29] In addition, even if Mr Zheng formed the view that he was not in a state of mind to genuinely understand or agree to the Redundancy Agreement when he signed the document, no legal advice or redress was undertaken to suggest to the Respondent any allegation of duress or that when he signed the Agreement that it was conditional on any basis. In the absence of any evidence otherwise, it can only be reasonably concluded that Mr Zheng accepted the financial offer by signing the Redundancy Agreement and by retaining the full paid sum. The Parties reached agreement without conditional terms, and the Redundancy Agreement reflects the final agreement. I do so find that the Agreement is a legally binding agreement on the Parties.

• [30] Mr Zheng confirmed that he did not ask for time to consider the document, nor did he challenge the document before him on 4 March 2025.

• [31] I do not accept the allegation that his signature was forged. Mr Zheng admits to signing the Agreement on 4 March 2025, and the uncontested evidence of the Respondent was that the only changes were to pages 5, 6, and 7.

• [32] If there is a final binding agreement, then an application for unfair dismissal has no reasonable prospect of success and is a ground on which the Commission ought to exercise its discretion to dismiss the application.

• [33] Even though it was not made out that Mr Zheng signed the Agreement under duress to render it voidable, this is not a matter for the Commission rather a court of competent jurisdiction to set aside the Binding Settlement Agreement.[8]

• [34] Furthermore, where there is accord and satisfaction (agreed terms and satisfaction of those terms), options for further litigation are extinguished and the application may be considered frivolous or vexatious or without reasonable prospects of success. Relevantly Besanko, J in Australian Postal Corporation v Brent Gorman and Fair Work Australia[9] reasoned:

"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."

• [35] The circumstances in this matter concord with the reasoning above. The Parties agreed to terms contained in a Binding Settlement Agreement executed on 4 March 2025. The correction to pages consisting of enhanced financial calculations and minor typographical amendments did not alter the substance of the Agreement. The Respondent made the payments which the Applicant has kept, and there is no evidence of action taken by the Applicant to set aside the Agreement. Hence this unfair dismissal application is extinguished consistent with the terms of the Redundancy Agreement in clauses 4 - full and final satisfaction, clause 5 - in consideration the Respondent is released from all claims and clause 9.1(b) - that the Agreement may be relied on as a bar to any clam arising in or in connection with Employment, the Contract and/ or the Termination.

• [36] Finally, Mr Zheng countered that he did not enter the Agreement with either full understanding or perhaps under a form of duress, these issues require a court of competent jurisdiction to consider whether the Agreement is valid or enforceable and it is not the role of this Commission.

• [37] Having considered the facts before me and the legal authorities where there is a binding settlement agreement, which I find there is one, I may use my discretion to dismiss the application pursuant to s.587(1) of the Act. Mr Zheng signed a binding Agreement which bars the Commission from hearing Mr Zheng's unfair dismissal application. Consequently s.587 of the Act is a relevant consideration.

• [38] At the commencement of section 587 of the Act, the words "without limiting when FWC may dismiss an application" means that the Commission has jurisdiction to dismiss applications on grounds that that are not explicitly contained in sections 587(1) (a), (b) and (c). Nevertheless, a binding settlement agreement that bars this Commission, enlivens both and either sub sections 587(1) (b) and (c). Relevantly the binding settlement agreement may concern (b) the application is frivolous or vexatious; or (c) the application has no reasonable prospects of success. Mr Zheng's application has no prospect of success and may also be frivolous and vexatious given the binding nature of the Binding Settlement Agreement. Consequently, this matter is dismissed pursuant to s.587(1) (b) and (c) of the Act.

P Watkins of Dentons Lawyers with S Shi and J Wei on behalf of the Respondent

[1] Witness Statement of Ms Sophie Shi, Annexures SS-7 (updated document with corrections on one page) and SS-5 (the original agreement signed).

[3] Australian Postal Corporation v Gorman [2011] FCA 975 at [31] - [33]; McMahon v Ventura Bus Lines Pty Ltd [2020] FWCFB 4853 at [31]; Singh v Insulect Australia Pty Ltd [2025] FWC 1495 at [43] - [45].

[4] Lewer v Australian Postal Corporation [2023] FWCFB at [56].

[5] Witness Statement of Ran Zheng (22 May 2025) at [43].

[6] Applicant's Outline of Submissions (20 June 2025) at [IV]; Applicant's Response to statement of Xiaomeng Wei.

[7] Witness Statement of Ran Zheng (22 May 2025) at [44] - [46].

[8] Chapman v Ignis Labs Pty Ltd T/A Ignis Labs [2020] FWCFB 3849 at [29], see also McMahon v Ventura Bus Lines Pty Ltd [2020] FWCFB 4853 at [31], Singh v Insulect Australia Pty Ltd [2025] FWC 1495 at [43] - [45] and Lewer v Australian Postal Corporation [2023] FWCFB56 at [37].

[9] [2011] FCA 975, an appeal from Gorman v Australia Post [2010] FWAFB 9413 noting paragraphs [31] - [33].

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