Confidentiality Provisions in Wrongful Dismissal Settlements: Enforceable?

Jan Wong photoMost settlement agreements in wrongful dismissal cases contain confidentiality provisions.  Employers do not want their former employees revealing the terms of the settlement.  The dismissed employee agrees that in exchange for a payment, he or she will give up the right to discuss the terms of the agreement.  This is generally viewed as a reasonable compromise and most dismissed employees are prepared to accept this term of settlement.  It allows employers to pay money without worrying that the case will become a precedent in their workplace.

But are these provisions really enforceable?   And what happens if they are breached?

A recent decision of an Ontario arbitrator provides an example of what can happen if a former employee is found to have breached a confidentiality provision.  In The Globe and Mail v. Communications, Energy and Paperworkers Union of Canada, a decision of arbitrator Louisa Davie, a former Globe and Mail writer, Jan Wong, was ordered to pay back a dismissal settlement after she was found to have breached the confidentiality terms of the agreement.

Well known correspondent Jan Wong had been an employee of the Globe and Mail.  She became depressed and was involved in a bitter fight with the Globe over her dismissal.  Eventually, the case was settled through mediation.  Ms Wong was apparently paid a sum of money in exchange for a confidentiality agreement.  The agreement provided that she could write about her experience with the Globe and could even make disparaging comments about the Globe, after a certain date.  However, the agreement also provided that Ms Wong could not reveal the terms of the settlement and if she did so, she would be required to pay back the entire amount of the settlement funds to the Globe.

Some time after the settlement, Ms Wong released her book Out Of The Blue, which I wrote about in 2012.  In the book, she noted that she had been paid a significant amount of money but was not permitted to discuss it.  She made some other comments in the book, including a comment that her sister told her that “she had gotten everything she wanted” and that she was so happy with the settlement she was ready to “dance a jig.”  She did not, however, reveal the amount that was paid.

The Globe decided that these comments were a breach of the settlement agreement.  It felt that the terms of the agreement prohibited Ms Wong from indicating that she had been paid any amount of money and that by telling the world, in a book, that she had been paid a large amount of money, Ms Wong breached the terms of the agreement.

The Globe brought these matters to the attention of the arbitrator who had been charged with handling the case.  It asked for a repayment order.  The arbitrator agreed with the Globe and ordered Ms Wong to pay back the full settlement amount.  In coming to this conclusion, arbitrator Davie accepted that some of the comments that Ms Wong made in her book were not a breach.  However, the fact that Ms Wong had made it clear that she had been paid a large amount of money by the Globe was held to be a breach of the terms and warranted the full payback.

The case is not typical of most wrongful dismissal cases because it occurred in a unionized environment.  Rather than going to court, the Globe simply went right back to the arbitrator who had been hearing the dispute in the first place before it was settled.  As a result, Ms Wong was represented at all times by union counsel, even though she made an unsuccessful court application to be entitled to use her own counsel in the matter.  There was obviously significant tension between Ms Wong and the union.

More significantly, employees rarely breach confidentiality provisions so publicly.  Here the employer did not have to prove that Ms Wong had actually said anything – it simply pulled out a copy of her book at the hearing and pointed to a number of passages.

One of the key union arguments, on behalf of Ms Wong, was that this was not a “substantial breach” of the type that would warrant such a harsh repayment order.  Ms Wong did not disclose the amount of the settlement or the detailed terms.  The fact that the case was settled almost always suggests that the employer paid some amount to the dismissed employee to resolve the dispute.

The arbitrator rejected these arguments.  She found that although Ms Wong might have been permitted to tell people that the case had been settled, the revelation that a large amount of money had been paid was a breach of the compromise settlement to which the parties had agreed.  The arbitrator further noted that although Ms Wong had run her book by legal counsel to ensure that she was not libeling anyone, she had not used legal counsel to vet the book against the settlement terms.  The arbitrator suggested that Ms Wong should have provided the book to union counsel to review before publishing it.

The end result seems quite harsh, irrespective of how much sympathy Ms Wong may or may not attract, personally.  (She had a history of conducting particularly aggressive and sometimes obnoxious interviews).  The agreement does not really define a “breach.”  The money was not all paid to Ms Wong only in exchange for a confidentiality provision.  It was paid, presumably to settle a significant liability that the Globe faced.  There is no discussion of the damage that the Globe suffered, nor any sense of proportionality to the award.

Since this is an arbitration award, Ms Wong would normally be required to convince the union to bring a judicial review application to an Ontario court.  Ms Wong is apparently making efforts to bring her own judicial review application, with her own counsel, even without full union support.

The case is a dangerous warning to dismissed employees who sign settlement agreements with confidentiality terms.  Employees who publish books or articles, post triumphant messages on Facebook or other social media, send around emails – or who otherwise discuss the terms of their confidential settlement arguments may find themselves in a second round of legal action with their former employers looking for payback

2 Comments

  1. Chris Budgell

    I live in B.C. I was just referred to this post by another former member of the union of which I was once a member – CUPE. Both of us were put through arbitration hearings, which we both characterize as kangaroo courts. I was offered a token amount of money days before the hearing was to start and turned it down even though I knew the union had done nothing whatsoever to prepare for the hearing. It actually went ahead without anyone from the union in attendance, but with a lawyer parachuted in at the last minute.

    I’ve since heard many stories about individuals signing settlements under extreme duress. When I can I try to warn people about this. I also tell anyone who has signed a settlement that their fight is over. There’s nothing more they can do. No tribunal or court will entertain any argument that an agreement was signed under duress.

    The “grievor” / “grievant” is not a party to an arbitration and the union’s advocate represent’s the union’s interests – which means that of the executives, not the rank-and-file members. These hearings are held in hotel rooms and are never recorded. This is our 21st century version of trial by ordeal. It is a situation sustained with the assistance of the labour boards and the courts. It is barbaric, and I believe it’s days are numbered.

    http://www.uncharted.ca/images/users/ssigurdur/052013_pblc_ltr_re_cj_to_naa.pdf

    • Ken Krupat

      Chris: My practice is generally limited to non-unionized employment situations – precisely for reasons you describe. It is the union that has the right to take the case forward for dismissed employees. The representation can be challenged in the labour board – but it is quite an uphill battle. Best of luck.

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