Tuesday, November 04, 2014

Salt on a Wound: Breaching Confidentiality of a Wrongful Dismissal Settlement Can Cost You


A cautionary tale for employees - an employer can and very likely will sue you, if you breach the confidentiality clause of an employment law settlement agreement. Just ask Jan Wong, a former employee of the Globe and Mail ("the Globe").

Upon her dismissal from the Globe in May 2008, Ms. Wong's union filed a series of grievances against the newspaper.  The outcome of the grievances were very favourable to Ms. Wong.   Not only was she awarded six months of sick-leave pay.  She also received an additional lump sum of $209,912, equivalent to two years of wages.

Her settlement agreement explicitly stated she was "not to disclose the terms of this settlement."
However in May 2012, Ms. Wong published her memoirs, entitled Out of the Blue, in which she disclosed, among other things:
  •  her legal dispute with the Globe;
  • "I had just been paid a pile of money to go away"';
  • "two weeks later, a big fat check landed in my account"; and,
  • that the Memorandum of Agreement (MOA) between the parties did not provide for a "gag order."
The Globe successfully argued that Ms. Wong breached the non-disclosure clause, which entitled the Globe to repayment of the settlement funds.  An arbitrator agreed with the Globe and ordered the repayment of the lump sum pay in lieu of notice.  This past Monday, Justice Ian Nordheimer of the Ontario Superior Court of Justice, not only reaffirmed Ms. Wong's $209,912 repayment obligation, but added an extra $30,000.00 that Ms. Wong must repay in legal costs to her former employer and her former union.

As this case demonstrates, a settlement agreement is a legally enforceable contract.  In exchange for valuable consideration (for example, in the case of a dismissed employee, consideration would be the employee's monetary entitlements), an employer often requires that an employee sign a non-disclosure clause in a settlement agreement.  A breach of the non-disclosure clause is a breach of contract, for which an employer may seek damages, which could include repayment of the entire settlement amount plus the employer's legal costs.

- Nitin Pardal, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

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