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Worker ordered to repay settlement money in sex discrimination case after posting about it on LinkedIn

Settlement agreements often contain confidentiality and non-disparagement clauses that limit what the parties can say (or imply) about the settlement and each other, and to whom that information can be told.

In L.C.C. v M.M., 2023 HRTO 1138, an employee was ordered to pay back the settlement money to the employer as a consequence of breaching the confidentiality and non-disparagement clauses contained within an Ontario Human Rights Code application settlement agreement.

Background

An employee had filed an application with the Ontario Human Rights Tribunal alleging that the employer had breached the Code.

The parties agreed to a mediation, resulting in a settlement agreement which contained confidentiality and mutual non-disparagement clauses.

Around 15 months after the settlement agreement was signed, the employer discovered that the employee had made a LinkedIn social media post stating, “To all those inquiring, I have come to a resolution in my Human Rights Complaint against [the applicant corporation] and [the individual applicant] for sex discrimination.”

The employee did not remove the post when requested to do so by the employer. Accordingly, the employer filed an application with the Tribunal alleging the employee’s social media post breached the confidentiality and non-disparagement clauses in the settlement agreement.

The Tribunal’s decision

The Tribunal found that the employee’s LinkedIn post did not comply with the “spirit” of the confidentiality provision and that it was not within the intentions of the parties for the clause to be interpreted or applied in the way that the employee had done.

Further, the employee’s post referenced “sex discrimination” which was not permitted wording under the settlement agreement. As such, the Tribunal found that the employee’s conduct had breached the confidentiality clause.

The Tribunal also found that the employee had breached the non-disparagement clause, stating that an objective reasonable person would perceive the publicizing of the employee’s LinkedIn statement as creating a “reputationally damaging link between the names of the parties and the serious unproven allegations of sex discrimination.”

Importantly, the Tribunal noted that the employee’s subjective understanding and belief about the settlement agreement and what actions were permissible under its confidentiality and non-disparagement clauses was irrelevant.

Given the Tribunal found the employee had breached both the confidentiality and non-disparagement clauses, it had the power, pursuant to s.45.9(8) of the Code, to make any order it considered appropriate to remedy a contravention of the settlement agreement.

The Tribunal noted that it is settled law that the remedy for a breach of contract is to put the applicant in the position they would have been in if the breach had not occurred. That said, it should not result in the applicant being placed into a better position or being provided with a non-proportional benefit.

Accordingly, the Tribunal ordered the employee to repay all the settlement monies back to the employer. No further penalties were ordered.

The Tribunal also ordered the employee to continue to comply with the remaining terms of the settlement agreement.

Lessons for employers

This case helps establish that a tribunal will look at the intentions of the parties and the “spirit” of the relevant contract provisions when assessing whether there has been a breach of a settlement agreement.

Further, it also helps establish that an employee’s “subjective understanding” of the interpretation and application of a settlement agreement is irrelevant; instead, it matters only what is “objective” and “reasonable.”

A tribunal will not hesitate to issue a remedy to the affected party when a contractual breech of a settlement agreement occurs. This should provide some peace of mind to employers that settlement agreements do in fact have “teeth”.

Finally, this case also provides some guidance on what “breach of contract” consequences the Human Rights Tribunal may be willing to enforce if imposed by a clause within a settlement agreement. The consequences must, at most, place the non-breaching party in the position they would have been in if the breach had not occurred. If the consequences result in a party gaining additional or non-proportional benefit(s) as a result of the breach, the clause may not be enforced.

As a note of caution, there has been some legislative discussion regarding limiting or prohibiting non-disclosure agreements with respect to workplace sexual harassment, misconduct, or violence. As such, it will be important to pay attention to whether such a prohibition comes into force as it will impact what kinds of clauses will be permitted in settlement agreements involving sexual harassment allegations.

John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.