When there is an employment relationship problem, either between an employer and an employee, or between two employees, most often the parties manage to settle the dispute without formal assistance from the Employment Relations Authority.

Resolution of the problem is often achieved through negotiation between lawyers, or between the parties themselves. Sometimes the parties agree to attend mediation, and with the assistance of a mediator, they are able to reach an agreement on how to resolve the dispute.

Once the parties have reached such an agreement, it is a good idea to have the terms of any agreement recorded in writing so that there can be no dispute later on as to what was agreed.  This agreement is often referred to as a “Record of Settlement”, and it should be signed by both parties, or their authorised representatives or agents.

If the parties want the agreement to be binding and enforceable, it is a good idea to also have the Record of Settlement signed by a mediator who is employed by the Mediation Services of the Ministry of Business Innovation and Employment. 

A binding and enforceable Record of Settlement is one which the Authority will ensure the parties follow. One way the Authority can enforce the agreement is to impose penalties on a party who commits a breach.

Before signing the Record of Settlement, the mediator will contact the parties, and will explain the effects of signing the agreement and check that the parties are not agreeing to give up any of their minimum entitlements. 

Record of Settlements may include all, or some, of the following terms:

  • Whether the employment relationship will continue, and if not, the date upon which the employment relationship will end;
  • How the termination of employment will be recorded (for instance as a redundancy, resignation, by mutual agreement, or as a termination);
  • Any outstanding payments the employer will make to the employee under the employment agreement (for instance, wages or salary owing or to be paid in lieu of notice, KiwiSaver payments, bonuses, commissions, holiday pay, and so on);
  • Any payments the employer will make to the employee as compensation (this can sometimes be agreed to be made without admission of liability);
  • Any payments that the employee will make to the employer, or deductions the employee agrees can be made from future wages or salary (for instance, where the employee has been overpaid);
  • Any contributions the employer will make towards the employee’s legal fees;
  • Details about when payments will be made and to what bank account;
  • Whether the employer agrees to act as a referee or agrees to provide a certificate of service;
  • Any agreement around property (for instance, to return a uniform, work phone, laptop, intellectual property, keys, or swipe card);
  • That the parties will not make any disparaging (or negative) comments about each other to any other person;
  • To keep the circumstances around the agreement confidential to the parties, or specific people;
  • Agreed conduct for future interactions between the parties (for instance to treat each other with respect and courtesy, to keep each informed, and so on);
  • Any further actions the parties are required to take/not to take (for instance, apologise, attend or pay for counselling, provide or attend further training, not engage in certain conduct, and so on);
  • Confirmation that the employee has not agreed to forgo minimum entitlements;
  • How the parties will deal with any future employment problems;
  • That the agreement is in full and final settlement of all matters between the parties arising out of their employment relationship; and/or
  • Whether the Record of Settlement will be lodged with Mediation Services for signing by a mediator, and who will facilitate the lodging.

There may be other things that you wish to include in a Record of Settlement.