2 March 2023

Breach of Agreement Made at Employment Mediation

When it comes to entering into Records of Settlement with former employees, there is often some agreement around what is or is not to be said.  This might include whether written references are to be given or perhaps agreement not to provide any reference or comment at all.

The Employment Relations Authority dealt with one of these situations in Timothy Levchenko-Scott v Presbyterian Support Central Charitable Trust.[1] Here the Authority dealt with an issue arising from an agreed Record of Settlement made in a mediation.

In the Record of Settlement, Presbyterian Support Central Charitable Trust (PSC) and Timothy Levchenko-Scott agreed that “neither will disparage nor speak ill of the other, non-disparagement extending to all forms of social media”.  It also recorded that the employer would “provide a written reference to Tim on PSC letterhead…the text of which is contained in the addendum to this settlement agreement.  If contacted by a third party, PSC will restrict its comments to those which are consistent with the text of the reference”.

Unfortunately, when Levchenko-Scott went looking for work, three potential employers withdrew offers of employment after reference-checking him.  They said that when PSC was asked whether they would employ him again, they answered “no”, and said he failed to align with the organisation’s values.

The Authority agreed with Levchenko-Scott that the comments made by PSC officials were outside the scope of the agreed text and were a breach of the Record of Settlement.  PSC was restricted to the agreed text discussed.  That meant that PSC could not say why they would not rehire Levchenko-Scott or to discuss his alignment with the organisation’s values.  The reference comments went too far.

For employers in this situation, there are a few lessons that can be taken from this decision:

• Think about what type of reference you are willing to give – will it be written only or will it be supported by a verbal reference?  Remember that, unless agreed, there is no requirement for a reference.  You might wish to keep clear of providing any reference so that you do not get yourself into a tricky position when providing a reference.
• Be clear on what is being agreed upon in a wider sense – what information is going to be included in any reference that is provided?  Be sure to agree on any factual statements around the reason for an employee’s exit.  Know what you are agreeing to in terms of non-disparaging remarks as well.
• Be realistic – while not all employer-employee relationships end on good terms, it is essential to keep acting in good faith and uphold your own reputation and mana.  As an employer, try not put yourself in a position where you might jeopardise that by agreeing to give references that you would rather not!

Cree is a Solicitor in our Workplace Law Team.  If you would like some assistance with employment workplace matters, please contact our Workplace Law Team.

[1]     Timothy Levchenko-Scott v Presbyterian Support Central Charitable Trust [2020] NZERA 452.