The importance of respecting confidentiality clauses in termination agreements

September 17, 2017 - by: Alexandra Meunier 0 COMMENTS

by Alexandra Meunier

In Canadian labor relations, parties commonly enter into termination agreements in order to settle grievances and avoid any future litigation. Such agreements may contain confidentiality clauses. However, what happens when a party does not strictly respect the content of a confidentiality clause?

This is the question that was submitted to the arbitrator André Bergeron in Centre de santé et de services sociaux du Sud de Lanaudière (Centre d’hébergement des Deux-Rives) et Syndicat interprofessionnel de la santé de Lanaudière Sud (SILS-FIQ) (France Paré), 2017 QCTA 496 [only available in French].

Facts

In this case, the union had filed many grievances to contest an employee’s various administrative and disciplinary measures, including her dismissal. In order to settle those grievances, the parties reached an agreement by which the employee’s dismissal would be replaced by a voluntarily resignation and the employer would pay the employee $5,000.

The agreement also contained a confidentiality clause that provided that the employer would only mention that the employee had voluntarily resigned from her employment if he was contacted for references.

A few months later, the employee’s new employer contacted her former employer for references. When the new employer questioned the former employer regarding the circumstances of the end of her employment, the former employer did in fact say that she had voluntarily resigned from her employment. However, when the new employer asked the former employer whether he would rehire the employee, he replied in the negative. The new employer therefore deduced that the employee had been dismissed and decided to terminate her.

The union filed a grievance against the former employer claiming damages for breach of the confidentiality clause contained in the termination agreement. It also requested that the initial grievances be heard.

Decision

First, the arbitrator declared that he had jurisdiction to hear the grievance despite the fact that the dispute originated from an agreement settling the initial grievances brought before him.

Subsequently, the arbitrator found that the employer had failed to comply with the agreement by indicating to the employee’s new employer that he would not hire her back. The arbitrator considered that, based on the agreement, the employer should have only indicated to the new employer that the employee had voluntarily resigned, and nothing more. The arbitrator indicated that, by signing the agreement, the employer was supposed to set aside the initial reasons he had for terminating her employment, especially if a future employer contacted him for references.

The arbitrator explained that if the employer was uncomfortable doing so he should not have agreed to act as a reference for the employee. By acting as he did, the employer violated the confidentiality clause and betrayed the employee’s trust in the content of the agreement.

The arbitrator therefore accepted to hear the initial grievances that had been settled by the agreement but did not decide on the issue of damages and on the issue of the $5,000 the employee had received from the employer.

Conclusion

This decision outlines the importance for employers to respect the confidentiality clauses contained in settlement agreements they enter into. In a case such as this, it would be advisable for employers to strictly adhere to the terms of the agreement or to simply refuse to give references to future employers or potential employers.

About Alexandra Meunier:
Alexandra is a member of the Labour, Employment & Human Rights group in the Montreal office. A graduate of McGill University's Faculty of Law, Alexandra earned a Bachelor's degrees in Civil Law as well as in Common Law. In connection with her practice, Alexandra handles all aspects of employment relations matters and, more specifically, the interpretation of collective agreements, grievance arbitrations, labour relations, labour standards, occupational health and safety issues as well as employment litigations. Social and community involvement are very important in her life. As such, she is involved with the Jeunes Gouverneurs des Grands Ballets Canadiens.
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