Two recent Ontario decisions show how employee conduct and
violation of settlement terms can invalidate such agreements and
give a basis for employers to recover payments already made under
Roder v 1049077 Ontario Limited, 2014
ONSC 4389 involved an employee who was dismissed due to poor
performance. The employee sued for wrongful dismissal and the
parties agreed to a settlement. Shortly after the minutes of
settlement were signed, the employer was informed by a
whistleblower that the employee had been working for one of the
employer's competitor's during his employment. Moreover, he
had done this work during his regular work hours with the employer
on a computer owned by the employer. It was discovered through
forensic computer analysis that the employee had attempted to
remove evidence of this work from his computer. Consequently, the
employer repudiated the settlement, and the employee brought a
motion to have the settlement enforced. In dismissing the
employee's motion the Judge concluded that settlements should
not be enforced when enforcement would create a clear risk of
injustice. Enforcing a settlement against an employer who did not
know and could not have known that their employee was abusing his
position with them would have constituted a clear risk of
Wong v The Globe and Mail Inc, 2014 ONSC
6372 involved an employee who was terminated without cause. In
Wong the employee, through her union, grieved her dismissal.
Through mediation the parties agreed that the employee, who had
been off work for almost 2 years due to depression, would receive
two separate lump sum payments: 1) a payment for 6 months of unpaid
sick leave; and 2) a lump sum payment of $209,000.00, the
equivalent of 2 years' salary. The Memorandum of Understanding
contained just one term for the benefit of the employer: a
requirement that the employee not disclose the terms of settlement.
Four years after her termination, the employee wrote a book in
which she referred to the settlement and clearly indicated that she
had received a large sum of money, though she did not reveal the
exact figure. The employer sought to enforce the non-disclosure
term before an arbitrator and was successful. The employee applied
for judicial review. In dismissing her claim, the Judge held that
the arbitrator's finding that the non-disclosure provision was
an enforcement provision was reasonable. Because the non-disclosure
term was an enforcement provision a breach of it meant that the
employee was required to repay the funds she had received in the
These cases show two ways in which employee conduct can
invalidate a settlement agreement. An employee's dishonest
conduct prior to the settlement, or during its negotiation,
unbeknownst to the employer, can justify an employer repudiating
the settlement if its enforcement could be clearly unjust. Or, an
employee's conduct after the settlement, in breaching key terms
of the settlement that are intended to enforce the agreement, could
justify an employer seeking repayment of the funds paid out as part
of the agreement.
Recent case law of the
Supreme Court of Canada finding an implied duty of good faith
in contracting should only serve to reinforce these findings.
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright is a global legal practice. We provide
the world's pre-eminent corporations and financial institutions
with a full business law service. We have more than 3800 lawyers
based in over 50 cities across Europe, the United States, Canada,
Latin America, Asia, Australia, Africa, the Middle East and Central
Recognized for our industry focus, we are strong across all
the key industry sectors: financial institutions; energy;
infrastructure, mining and commodities; transport; technology and
innovation; and life sciences and healthcare.
Wherever we are, we operate in accordance with our global
business principles of quality, unity and integrity. We aim to
provide the highest possible standard of legal service in each of
our offices and to maintain that level of quality at every point of
Norton Rose Fulbright LLP, Norton Rose Fulbright Australia,
Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South
Africa (incorporated as Deneys Reitz Inc) and Fulbright &
Jaworski LLP, each of which is a separate legal entity, are members
('the Norton Rose Fulbright members') of Norton Rose
Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein
helps coordinate the activities of the Norton Rose Fulbright
members but does not itself provide legal services to
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should be
sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).