After a marathon code of conduct hearing, the Israel Folau case appears to be heading towards the place it was always likely to end up – a court room. That is unless “common sense” prevails.
Rugby Australia’s code of conduct panel ruled on Tuesday night that Folau had committed a high-level breach of his contract by posting a religiously-inspired, anti-gay comment on social media. The three-person panel will now determine Folau’s punishment, which includes the potential to terminate his $4m, four-year contract.
Importantly, the panel does not have to recommend the termination of Folau’s contract. It could simply propose to fine and/or suspend him, but given the circumstances there seems to be a strong chance he will be sacked. If that does prove to be the case, it is almost certain Folau will launch legal action for unfair dismissal on the grounds of religious freedom.
There is no guarantee a court of law would necessarily find in Rugby Australia’s favour, as the code of conduct hearing did. And even if RA won a court battle, Folau could drag out the finality of the case by filing an appeal. The agony could go for years. But a protracted, costly and stressful court battle would not be in anyone’s interests, leaving open the possibility of an out-of-court settlement.
Foreseeing a potential no-win situation for Folau or the code, NSW Waratahs chairman Roger Davis has already called for a “common sense” settlement to be reached between the parties to stop the matter from going to court.
Unlike a court case, an out-of-court settlement would offer the disputing parties less stress, certainty of collecting any compensation, fewer expenses, a faster agreement and perhaps the most important point of all, finality. That is why an estimated 90% of all cases settle before going to trial.
It is possible a process to that end is already under way. An article in a Sydney newspaper last Sunday reported that RA offered Folau $1m to settle the matter before the code of conduct hearing, but was rejected out of hand. Whether RA has or has not made an offer to Folau, the report certainly raises the question of what would be a reasonable offer if the two parties did try to reach a settlement.
In 99 out of 100 cases offers of compromise are strategic, particularly in relation to the value of the offer. It is not uncommon for an initial offer to be low, nor is it unusual for the first offer to be rejected. Given Folau’s four-year contract was worth $4m, would a $1m offer be regarded as low or high?
Folau is only six months into the contract, which means there would be a balance of around $3.5m. An offer of $1m would be less than 30% of the remainder of his contract, which would appear to be on the low side. But a $1m offer might be a low starting point with a view to negotiating upwards, which is fairly common practice.
Conversely, $1m may be as high as RA would be prepared to go. The organisation might argue Folau could command the same kind of money in Europe or Japan as he does in Australia, if not more.
If Folau was released from his contract and picked up a multi-million dollar deal overseas, a $1m offer might be seen as a lucrative bonus. But there are reports that if Folau was sacked, English, French and Japanese clubs would be reluctant to sign him because of the controversy, which you would think would motivate him to seek a higher payout than $1m.
In the end the two parties would have to negotiate a fair settlement and that would require compromise and common sense on both sides.
In any settlement process there is an obligation on both sides to act reasonably. What is reasonable in this situation? Like the core conflict between sexual discrimination and religious freedom, there are two sides to the argument. What would be fair? Splitting the difference? There would certainly be a lot of number-crunching by both sides to come up with a satisfactory figure.
Regardless of the final outcome of the code of conduct hearing, there is still plenty of time for RA and Folau to reach a settlement, which can be done at any time, even after court proceedings have begun, if indeed that is where the matter heads. Many a last-minute deal has been struck on the court-house steps.