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The Federal Court has rejected a bid by Comcare to recover nearly $680,000 from a former Australian Federal Police (AFP) officer in incapacity payments after she received a $1.25 million payment from the AFP to settle her sexual harassment and discrimination complaint.1
- Employers should be aware that a lump sum amount paid to settle an employee’s claim or complaint may not constitute “damages” for an injury for which the employee may receive payments under a statutory workers’ compensation scheme.
- In negotiating and drafting deeds of releases in settlement of a claim or complaint, care should be taken to capture what the settlement sums are intended to cover.
The AFP officer, Ms Friend, commenced employment with the AFP in September 2006.
In around 2013, Ms Friend began working at the Sydney International Airport. In 2014, Comcare accepted Ms Friend’s claim for workers’ compensation for various health conditions due to exposure to prolonged harassment and bullying from her supervisor while working for the AFP.
In 2018, Ms Friend lodged a complaint with the Australian Human Rights Commission (AHRC) claiming she had been discriminated against on the grounds of disability and sex and that she had been sexually harassed between March 2013 and early 2014. Ms Friend claimed that over an eight-month period between 2013 and 2014, the AFP and four of its officers had engaged in acts of unlawful discrimination against her, and that one of the officers sexually harassed her. Ms Friend complained of sexually inappropriate conduct by her supervisor, which included rubbing himself against her in a sexual and inappropriate manner, making comments about her anatomy, showing her explicit images and spreading malicious rumours about her.
AFP settled the complaint for a lump sum of $1.25 million, as part of the AHRC conciliation process, and the terms of settlement were documented in a deed of release. Critically, the deed of release included:
- an indemnity by Ms Friend that indemnified the AFP against any liability, loss, damage or expense incurred by the AFP in relation to any liability that Ms Friend or the AFP becomes aware of after the AFP has paid the settlement payment; and
- a provision that the release and indemnity (under the Deed) does not apply to any claim or liability in respect of statutory benefits payable under the applicable workers’ compensation legislation.
After Ms Friend received the lump sum settlement amount, Comcare sought to recover from her $677,364 in workers’ compensation payments made to her. Comcare argued that the lump sum amount that Ms Friend received from the AFP was ‘damages’ in respect of an injury for which compensation was payable under the Safety, Rehabilitation and Compensation Act 1988 (Cth), and that pursuant to s48 of that Act, the workers’ compensation payments were recoverable from Ms Friend to prevent ‘double dipping’.
The court disagreed with Comcare and ordered that Ms Friend was entitled to keep both the workers’ compensation payments of $677,364 and the lump sum payment of $1.25 million. The court decided that this was not ‘double-dipping’ because the lump sum payment, in settlement of the AHRC complaint about the alleged unlawful discrimination and sexual harassment, was distinct from damages in respect of an injury under the workers’ compensation legislation.