Canada: Employee Who Violates Settlement Agreement Gets Less

Last Updated: January 3 2013
Article by Brian P. Smeenk

It is common practice when settling a human rights complaint or a wrongful dismissal claim to include a mutual confidentiality obligation. What can an employer do if the employee fails to honour it? What if they blab about the settlement to their co-workers? A recent decision of the Human Rights Tribunal of Ontario [ Tremblay vs. 1168531 Ontario Inc. and Amy Lalonde] addressed this issue head on.  The decision could have broad application to settlements of other employment cases, in other provinces and before other tribunals and courts.

WHAT HAPPENED HERE

Trish-Ann Tremblay filed a human rights complaint against her employer, a fast food franchise in Cornwall, Ontario. She and her boss went to a mediation convened by the Human Rights Tribunal. They signed a mediation agreement. In it, they agreed that the mediation was a confidential process. When they settled Tremblay's complaint, they expressly agreed "to maintain confidentiality of the terms of these Minutes of Settlement, and ... not discuss or disclose the terms... with anyone other than immediate family..."

It turned out that Tremblay had been posting messages about the mediation on her Facebook account while it was going on. And immediately after, she posted, "Well court is done didn't get what I wanted but I still walked away with some..."  About 4 hours later she again posted, "Well my mother always said something is better than nothing..."

Tremblay's boss then refused to pay any of the settlement. He said he wanted the Tribunal to sort matters out. He argued that Tremblay's breach of confidentiality made the agreement void.

WHAT THE TRIBUNAL RULED

The Tribunal considered what it should do about both Tremblay's violation of the settlement and the employer's failure to pay. Unlike some other tribunals, it has the express authority under Ontario's Human Rights Code to remedy these situations. It can make "any order that it considers appropriate to remedy the contravention." 

The Tribunal said that, "the driving consideration is remedying harm" that results from failing to honour a deal. This discredits the system. It generates disincentives to negotiate settlements. Awarding monetary compensation for violation of a settlement can help reflect both the private and public importance of complying with them.

The decision first looked at whether the Tribunal should provide a monetary penalty against the employer for failing to pay the settlement. It found that it was reasonable for the employer to leave it for the Tribunal to sort out the matter. While in other human rights cases employers have been tagged with monetary penalties for failing to pay up, the Tribunal refused to make such an order here. But the employer did have to pay interest on the amount it should have paid.

The Tribunal then looked at how to remedy Tremblay's breach of confidentiality. This was the first time the Tribunal had to decide this issue. It noted that the confidentiality clause was important to the employer, because they had denied liability and they were in a small town. The employer did not want others filing similar claims. The Tribunal noted that it is hard to remedy a breach of confidentiality, because once breached, the secret is out. 

In the result, the Tribunal decided to reduce the amount payable to Tremblay by $1,000.  Since the original settlement amount was not disclosed, we don't know how big a portion this represented. 

TAKE AWAY POINTS

This case confirms that employees can be penalized financially for violating a confidentiality clause in a settlement with their employer. Violations can include posting about it on social media. However, employers must be careful about using such a violation as a reason not to honour the settlement. The entire agreement does not automatically become void.  An employer could also be penalized for failure to pay the settlement. 

While the Human Rights Tribunal had clear statutory authority to remedy the breach here, the same result could happen where a court or a tribunal is given authority in the settlement agreement to deal with any failure to honour it. In other cases, such authority may be implied. 

This still leaves open the question of what the appropriate remedy should be for breaching a confidentiality agreement. How much is it worth? What is the damage to the employer?  

This case would seem to support your ability to write into your settlement agreements an amount that constitutes the parties' agreement on what the damages are for breach of confidentiality. This may in fact be the best way to avoid or to remedy such a violation.

www.fasken.com

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