Employee who talks about settlement gets less

By Brian P. Smeenk

It’s common practice across Canada, when settling a discrimination or wrongful termination claim, to agree that the deal will remain confidential. What can an employer do if employees fail to honor that agreement? What if they blab about the settlement to their coworkers?

This is a vexing problem. Must you still pay the settlement? Can you reduce the payment? Do you have to start a fresh lawsuit? A recent decision of the Human Rights Tribunal of Ontario (Tremblay vs. 1168531 Ontario Inc. and Amy Lalonde, October 15, 2012) addresses 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 across Canada.

What happened here?

Trish-Ann Tremblay filed a discrimination 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 of Ontario. They signed a mediation agreement. They agreed that 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 actually going on. And immediately after they were done she posted: “Well court is done didn’t get what I wanted but I still walked away with some …” About four 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 honor a deal. This discredits the system. It generates disincentives to negotiate settlements. Awarding monetary compensation for violating a settlement can help reflect both the private and public importance of complying with settlement terms.

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 had been reasonable for the employer to leave it for the tribunal to sort out. While in other discrimination 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 it had denied liability and it was located in a small town. There was a reputational issue. And the employer didn’t want others filing similar claims. The tribunal noted that it’s 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 wasn’t disclosed, we don’t know how big a portion this represented.

Takeaway points

This case confirms that employees in Canada 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 honor the settlement. The entire agreement doesn’t automatically become void. An employer also could 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 when a court or a tribunal is given authority in the settlement agreement to deal with any failure to honor 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’ assessment 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.

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  Brian Smeenk, Fasken
  Brian Smeenk is a Toronto partner in Fasken's Labour, Employment & Human Rights Group. He is also editor-in-chief of Northern Exposure and a member of the Employers Counsel Network. Since 1981, Brian's practice has focused on management-side labour and employment law. He represents both private sector and public sector employers, including many multi-national companies, in all aspects of labour relations and employment law and appears before tribunals and courts at all levels.