Have you ever felt the urge to complain to friends, family or even social media followers, about that awful work meeting, or the annoying thing your boss said? If you have signed a settlement agreement, these types of disclosures may be strictly off limits.
A recent Human Rights Review Tribunal decision serves as a timely reminder that contractual confidentiality and non-disparagement obligations are not mere formalities.
Human Rights Review Tribunal Case
A Christchurch supermarket employee who received a $20,000 settlement following mediation with his employer, was ultimately ordered to repay the entirety of that settlement and contribute more than $21,000 towards the employer’s legal costs.
The parties entered into a settlement agreement following a Human Rights Commission mediation in 2022. Among other things, the agreement required both parties to keep the settlement confidential and refrain from making disparaging comments about the other.
Despite those obligations, the employee subsequently sent emails discussing the settlement and criticising his former employer to a range of recipients, including government agencies, media organisations, former colleagues and senior personnel. He also posted material online, including YouTube videos referring to the settlement negotiations.
The employer then filed a claim with the Human Rights Review Tribunal, which determined these actions breached settlement obligations. The Tribunal ordered the employee to repay the settlement sum together with a $21,600 contribution towards legal costs.
Why do confidentiality and non-disparagement clauses matter?
It would be difficult to find a settlement agreement that does not contain both confidentiality and non-disparagement provisions. These clauses are often important to both parties, including for preserving brand and reputation, and ensuring finality of the dispute.
A non-disparagement clause generally prevents a person from saying or communicating anything negative about the other party. Read more about non-disparagement clauses here.
Confidentiality clauses commonly require the terms of the settlement, the settlement agreement itself, and matters relating to the dispute to remain strictly confidential. Disclosure is usually only permitted where required by law or expressly allowed under the agreement. Depending on the wording, confidentiality obligations can be very broad, and it pays to consider these clauses carefully.
Practical considerations
Some key things for both employees and employers to bear in mind:
- Ensuring that settlement agreements clearly define the scope of confidentiality and non-disparagement obligations. Ambiguous drafting can create uncertainty and increase the likelihood of future disputes.
- Generally, parties should refrain from discussing the dispute, the mediation process or the outcome with anyone other than those specifically authorised under the agreement.
- If there is uncertainty about whether a disclosure is permitted, legal advice should be sought in the first instance.
Settlement agreements are intended to provide finality. This recent decision demonstrates that confidentiality and non-disparagement obligations are far more than just ‘tick box’ clauses – the consequences of breaching them can be costly, and not just for financial reasons.
If you have questions about confidentiality obligations, enforcing settlement terms, or any other employment related matters, contact our Employment Law team today.
