When is a full and final record of settlement not full and final?

Many people assume when they have entered into a binding record of settlement to resolve an employment relationship problem, that will be an end of the matter, other than for enforcement purposes. Well, not always so.

It is well established that records of settlement must specify exactly what the legal issues are that are being resolved between the parties. It is not sufficient to use the global expression ‘settles all matters between the parties’, without documenting exactly what the employment relationship problems are which are being resolved. This wording will not be effective in barring new claims raised after the record of settlement has been entered into even when the record of settlement has been certified by a Ministry of Business Innovation and Employment mediator.

Employees cannot sign away their minimum statutory entitlements either. So, for example, a settlement which resolves a dispute about annual holiday entitlement, cannot prevent a subsequent claim being brought about the calculation of their annual holiday pay.

For most employers, and many employees, securing agreement on confidentiality and non-disparagement is a valuable consideration in the overall settlement. However, there are two main circumstances when confidentiality must be breached. The first is if evidence is required from the employer when criminal proceedings have been brought against the employee arising out of the employee’s conduct in the employment. The second relates to mandatory reporting obligations.

Mandatory reporting obligations

Medical professionals, educators, lawyers, accountants and others whose work is subject to regulatory supervision and oversight under Professional Codes of Conduct and Statutory Complaints Schemes, cannot contract out of mandatory reporting obligations in records of settlement. These Codes and Complaints Schemes are designed to ensure a practitioner’s:

  • compliance with regulatory standards;
  • competency to provide a service to the public; and
  • they are fit to practise.

If an employee works in a regulated profession and has been dismissed following an internal disciplinary or performance management process, or resigns during, or within 12 months of such a process, it triggers a legal requirement for the employer to file a mandatory report to the Regulator. The Regulator will then consider whether the conduct or behaviour reported contravenes, or may contravene, its professional Codes of Conduct or other professional standards. If it does, the Regulator will convene a professional standards committee to undertake a formal investigation.

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