Employees beware – when you settle an anti-discrimination or unfair dismissal complaint, you may also be giving up the right to sue your employer for common law damages for personal injury — even if that was never your intention.
A recent case before the Queensland Supreme Court (Bakhit -v- Hartley Healy Pty Ltd) involved a former employee who had made a discrimination complaint against her employer for sexual harassment in the workplace. That complaint was resolved through a conciliation process, and the parties signed a deed of settlement.
The employee later brought a separate Supreme Court claim against the employer. She alleged that because of the sexual harassment, she suffered psychological harm. She alleged that her injury was caused by the employer’s breach of duty of care and she sought common law damages.
The problem? The settlement deed in the discrimination complaint released the employer from all claims connected with the employee’s employment. In everyday terms, that meant anything connected to what happened at work — not just the anti-discrimination complaint.
The scope of the release
There was a carve out in the settlement deed: the release did not apply to a claim by the employee for statutory benefits under the Workers’ Compensation and Rehabilitation Act.
The employee argued that her common law damages claim should survive because it was a claim for statutory workers’ compensation benefits. After all, she was pursuing damages as a worker under the processes prescribed by the Queensland workers’ compensation legislation.
The Court rejected the employee’s argument. It drew a distinction between statutory workers’ compensation benefits (which generally cannot be signed away) and common law damages claims, which can be released by settlement if the wording is clear enough.
Statutory benefits vs common law damages
Statutory benefits are no-fault payments and support provided under legislation — in this case, benefits like weekly payments, medical treatment and rehabilitation. They exist because a statute creates them and generally cannot be signed away. Common law damages, by contrast, are not created by statute but arise from the common law, and are only payable if fault (such as negligence) is proven. The court accepted that Queensland’s workers’ compensation legislation regulates the processes by which you access damages, but this doesn’t change the fact that the entitlement to damages arises independently from legislation.
Many settlement deeds are drafted by employers (or their insurers) and are deliberately broad. They can capture far more than just the discrimination or unfair dismissal complaint you are trying to resolve. They may also extinguish rights to pursue damages for psychiatric injury, negligence, or other common law causes of action.
This is especially important because the money paid in an anti-discrimination or unfair dismissal settlement is often modest compared to what might be recoverable in a successful damages claim. In this case, the settlement sum was $30,000 — and it ended all other avenues of recovery.
What to do before signing a release?
Before signing any settlement with your employer, you should always ask:
- Does this deed release only the discrimination or dismissal claim?
- Are there clear carve-outs preserving my right to sue later?
Getting advice early can make the difference between preserving your rights and losing them forever. Once a release is signed, the Court will usually enforce it — even if the consequences are harsh.
