CONFIDENTIALITY IN EMPLOYMENT SETTLEMENTS

It is every employee’s natural inclination to boast about reaching a favourable settlement with his/her former employer, particularly in the context of a wrongful dismissal. Employees want to publicize the terms of settlement as an affirmation that they “stuck it to the man”. Employment lawyers know that employees cannot simply advertise the monetary payment received from the employer because settlements in employment and labour law matters routinely include a confidentiality provision that restrains the employee from disclosing any aspect of the terms of settlement.

Confidentiality provisions are standard in every settlement between employers and employees. Employers want to limit the number of individuals who will have knowledge of any of the terms of settlement. The provisions generally permit the employee to share the terms of settlement with family members, legal counsel, financial advisors and/or government agencies.

Lawyers are ethically bound to hold all client information acquired in the course of a professional relationship in the strictest of confidence and therefore familiar with the constraints imposed by confidentiality clauses in settlement agreements. The lawyer representing the employee must take care to emphasize the nature of the obligations being imposed upon the employee as a result of the settlement.

In the age of social media, lawyers are concerned that an indiscrete posting about a settlement on Twitter, Snapchat or Instagram will be communicated to a wide audience that may come to the employer’s attention. The disclosure of any part of the terms of the agreement place an employee’s settlement at risk.

In the case of Wong v. The Globe and Mail Inc., 2014 ONSC 6372 (CanLII) (Div. Ct.), Ms. Wong’s union entered into a Memorandum of Agreement to settle a grievance against Globe filed on behalf of Ms. Wong, which included a significant monetary settlement. The Memorandum also included a confidentiality provision and a non-disparagement clause. Four years after the settlement, Ms. Wong sought to publish a book about her experiences as a journalist. The book included twenty-three references to the settlement of her grievance against the Globe and Mail, including that fact that she had received: “a big pile of money”; “a big fat cheque”; and ended up with “a swollen bank account”. An arbitrator decided that Ms. Wong breached the confidentiality provision, the employer had lost the benefit of an essential term of the settlement and therefore required Ms. Wong to repay the money paid to her by the employer. Ms. Wong’s applied to the Divisional Court of for a judicial review of the arbitrator’s decision. The Divisional Court found the arbitrator’s decision to be both reasonable and correct. The Court also ordered Ms. Wong to pay legal costs totalling $30,000.00.

In the face of a confidentiality provision in a settlement agreement, if questioned, an employee may state that the dispute has been resolved and/or indicate the parties have reached an agreement but nothing more. A settlement is private with the terms remaining as between the parties.

TERMINATION OF EMPLOYMENT

An employer may terminate an employee at any time “with cause” or “without cause”.

Cause

An employer may summarily dismiss an employee without notice when “cause” exists. “Cause” is the situation where an employee’s conduct: violates an essential condition of the employment contract; breaches the good faith inherent in the work relationship; or is fundamentally or directly inconsistent with the employee’s obligation to his or her employer. The most common examples of cause are dishonesty, theft, or violence in the workplace. Termination for “cause” is considered the capital punishment of employment law and it is reserved only for the worst employee offenses. 

Without Cause

When an employer terminates an employee “without cause” the termination is considered a breach of the employment contract. The common law of Ontario requires the employer to provide the employee with “reasonable notice” of the termination. Reasonable notice may take the form of either “working notice”, or pay in lieu of notice”.

Wrongful dismissal is the situation where an employer fails to provide the employee with reasonable notice of termination. The terminated employee is then entitled to assert a claim to recover the value of all losses arising from the employer’s failure to give reasonable notice. The employee’s claim includes the employee’s regular salary together with financial compensation for all lost benefits through to the end of the notice period.

There is no formula for the calculation of reasonable notice. Reasonable notice is determined based on all the circumstances of the individual employee. The courts have described the process of determining reasonable notice as an art, and not a science. The court examines the following factors to determine reasonable notice: the age of the employee; the length of service with the employer; the employee’s position with the employer; the employee’s position with the employer; the employee’s education and/or training; as well as the employee’s experience. These factors are not exhaustive. There are many other factors that will impact on the determination of what is reasonable notice in the circumstances.

Written Employment Contracts

A written employment contract may modify and/or re-define the employer’s obligation to pay the employee notice on termination “without cause”. Employers generally include provisions that will seek to limit or reduce the employer’s common law obligation to pay reasonable notice on a termination without cause.