Six-figure Settlements – No Longer a Rarity

12 May 2017

Recently released data reveals an increasing trend towards employers settling general protections claims for six-figure sums to avoid the risk of uncapped compensation if the cases go to court.

In the 2015-2016 financial year, 13 general protections claims involving dismissal settled for more than $100,000 – with a further 49 settling for more than $50,000.

The data comes from the Fair Work Commission (“FWC“), which conducts conciliation and mediation prior to issuing certificates which enable the dispute to proceed to the courts.

Whilst unfair dismissal compensation is capped to six months’ pay, general protections regime claims are uncapped, exposing employers to significant risks if the cases go to trial in the Federal Courts.

The FWC annual report says the Commission received 3,270 applications to resolve general protections disputes involving dismissal in 2015 – 2016. Almost 1,200 of those cases settled without payouts, while the Commission issued certificates for 755 to proceed to court.

But before employers decide to reconcile themselves to the idea of having to add a few extra zeros to the end of their settlement cheques, it is worth mentioning that a sizeable 950 claims were settled for less than $15,000.

Overall employers should be aware of this trend towards settling claims for significant sums and approach employee dismissal on a case-by-case basis. In cases where employers are uncertain about complying with the Fair Work Act 2009 (Cth), it may be worthwhile consulting a professional, it could save tens of thousands in the long run.

Timothy Ashton of Hentys Lawyers has over 30 years of experience in workers compensation, industrial relations and discrimination claims and proceedings, and works for a significant number of multi-national companies and household names. Please contact Timothy for advice by sending an email to hjk@hentys.com.au.