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Australia Post has agreed to pay former chief executive Christine Holgate a settlement of $1 million plus $100,000 in legal costs.

The parties agreed to the settlement without the Government-owned enterprise making any admission of liability over her departure from the job in October last year.

Australia Post said in a statement today that the parties participated in mediation on July 23 before former Federal Court judge Peter Jacobson.

Australia Post acknowledged “that it has lost an effective CEO following the events on the morning of 22 October 2020” and said it regretted “the difficult circumstances surrounding Ms Holgate’s departure from her role as CEO”.

Holgate has denied that she agreed to stand aside after a controversy about the purchase of luxury watches worth about $5000 each to reward four executives who struck a banking deal that provided a $220 million benefit to post offices.

At the time, Prime Minister Scott Morrison told Federal Parliament he felt “appalled” when a Senate Estimates committee heard about the purchase of the watches and the Government immediately decided that Holgate should stand aside pending an inquiry.

“The chief executive has been instructed to stand aside and, if she doesn’t wish to do that, she can go,” he said at the time.

In April this year, Holgate submitted an opinion by barrister Ingmar Taylor SC to a Senate inquiry, which said that standing her down repudiated her contract, entitling her to elect to terminate it and seek compensation.

However, Australia Post chair Lucio Di Bartolomeo contested the alleged unlawfulness of standing Holgate down, arguing she agreed to do so pending the result of the department’s investigation and any further actions taken by the employer.

In May, a report by the Senate’s Environment and Communications References Committee said Australia Post owed Holgate an apology for being denied procedural fairness and natural justice when she parted ways with the organisation.

The report said Di Bartolomeo told the inquiry that a non-compete clause in Holgate’s contract would still apply, meaning she could not “enter into a job in competition with Australia Post”.

It said Holgate’s primary concern appeared to be that Australia Post expected her to remain bound by the non-compete clause while, at the same time, forgoing the compensation entitlement under her contract.

“In addition, Australia Post was asking her to sign a variation to her contract that stipulated she would not seek ‘any other financial compensation from Australia Post’.

“Clause 14.1 of Ms Holgate’s contract of employment (contract) states that variations must be in writing and signed by both parties.

“Ms Holgate submitted that she has ‘not signed any document’, and that ‘Australia Post appear to blatantly disregard my contract’.

“According to Ms Holgate, she ‘offered to resign with the important condition was that the agreement was reached that day.

“It was not’.”

In May, Holgate confirmed she had agreed to join Toll Global Express as chief executive and planned to grow its e-commerce, sales and delivery operations in competition with Australia Post.