Arbitrators impose strict consequences for breach of confidentiality in settlement agreements

Labour disputes in Ontario are often resolved by the parties entering settlement agreements.  Such agreements not only resolve the dispute but they also allow the parties to maintain their legal positions without admitting liability.  One of the ways this outcome is achieved is by including strongly-worded confidentiality provisions in the settlement agreement.  Two recent arbitration decisions in Ontario highlight the instrumental role that confidentiality plays in achieving labour dispute settlements.  In both Barrie Police Services Board and Barrie Police Association (August, 2013) and Globe and Mail v. CEPUC (Breach of Memorandum Grievance) (July, 2013), the employees were ordered to repay settlement amounts after they breached their confidentiality obligations and disclosed terms of their settlement agreements.   

In Barrie Police Services Board v. Barrie Police Association, the employer and union settled a grievance relating to the removal of a police constable from the Criminal Investigations Department.  The terms of the settlement included an obligation on the employer to pay the grievor 28 months of salary.  The settlement agreement also contained a clear statement that the terms of the settlement were confidential and without prejudice.  In spite of that clause, the grievor disclosed the terms of the settlement in an email sent to members of the Barrie Police Services in an effort to be elected as president of the Association.   At arbitration, Arbitrator Marcotte rejected the grievor’s argument that he was not a signatory to the settlement agreement and therefore not bound by the confidentiality obligation.  He noted that as exclusive bargaining agent for its members, the Association had the authority to bind the grievor, notwithstanding that the grievor had not himself signed the agreement.  In determining the appropriate remedy, the arbitrator stressed the importance of confidentiality and sent a stern warning to future parties to settlement agreements:

In my view…the deliberateness of the grievor’s actions and the motive for doing so cannot be condoned to any degree whatsoever.  In these circumstances, I find the appropriate remedy is for the grievor to return the money provided to him…Not only is this remedy warranted, but it serves to act as a deterrent to members of either party who, in the future, may be of the view that a confidentiality clause need not be adhered to…

A similar order was made in Globe and Mail v. CEPUC (Breach of Memorandum Grievance).  This case involved a settlement of grievances relating to the employee’s termination and claim for sick leave.  In addition to the confidentiality obligation, the settlement agreement contained an express clause stating that the grievor would be required to repay the settlement amount, should she breach her confidentiality obligation.  

A few years following the settlement, the grievor published a book detailing her struggles with depression and the termination of her employment with the Globe and Mail.  In the book, although the grievor did not disclose the exact settlement amount, she made a number of references to the size of the settlement and the fact that she was successful.  Arbitrator Davie had little difficulty upholding the provision of the settlement agreement which required the grievor to repay all of the settlement money upon breach of her confidentiality obligation.  In the arbitrator’s view, the settlement agreement was clear and unambiguous in setting out the consequences of such a breach.  Furthermore, the employer had lost the benefit it had negotiated when the grievor disclosed aspects of the settlement.  The grievor was ordered to repay all the settlement money she received under the agreement.

The importance of confidentiality in the settlement process has also been recognized by the Human Rights Tribunal of Ontario.  In Tremblay v. 1168531 Ontario Inc. (October, 2012) the Tribunal reduced the amount payable to the employee pursuant to Minutes of Settlement after she posted details of the settlement on her Facebook account.  In discussing the appropriate remedy for the breach, the Tribunal discussed confidentiality in the context of complaints under the Human Rights Code and quoted the following passage from Saunders v. Toronto Standard Condominium Corp. No. 1571 (December, 2010):

Respect for terms of settlement is not only a legally binding, contractual obligation, it also promotes essential Code values.  A contravention of settlement can undermine the administration of justice by discrediting the human rights system and generating wrong disincentives to negotiation. The uncertainty created by a contravention of settlement potentially undermines the substantive and procedural provisions of the Code.  An award of monetary compensation can help reflect both the private and public importance of complying with settlement terms. 

In considering the appropriate remedy, the Tribunal took into account both the public nature of Facebook, and the fact that the employee did not disclose the actual amount of the settlement.  The Tribunal ultimately reduced the settlement amount by $1000.

In Our View

These decisions recognize the value in resolving labour disputes through settlements, and the importance that confidentiality plays in the settlement process.  The serious consequences that will flow from an employee’s breach of a non-disclosure obligation will enable employers to continue to negotiate settlements without fear that payment terms will set precedents for, or encourage, other grievances.

For further information, please contact André Champagne at (613) 940-2735.

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