Tuesday, July 9, 2013

Journalist Ordered to Repay Settlement Money

The vast majority of wrongful dismissals settle at some point, which means that the employee and employer agree on terms as to what the employer will pay.

As part of this, an employee is always required to execute a full and final release, promising among other things not to sue for anything else.  Another very common term is that an employee would be required not to disclose the terms of the settlement (with certain exceptions).  The importance of these clauses is to prevent employees from telling other employees what they received, because this hurts the employer's negotiating position dealing with these other employees.

And some settlements go a step further, saying that breach of the confidentiality clause will negate the employer's payment obligations, and require the employee to reimburse the employer.

However, employees will talk, and such clauses are difficult to enforce, mainly because of the difficulty of proof.  Most people know better than to talk openly about the terms of settlement, and proving what was said in a private conversation can be challenging.  (Besides, does a wink and a nudge and a lawyer's business card violate any confidence?  Probably not.)  Accordingly, I have never seen such a clause enforced.  Until now.

The Toronto Star reported last week that Arbitrator Louise Davie ordered journalist Jan Wong to repay the Globe & Mail the money she received under a settlement from a discharge grievance, because of a breach of confidentiality.  The issue of proof was less significant here:  Ms. Wong wrote a book which alluded in some fairly direct ways to the terms of settlement.

It's a big deal.  The Arbitrator thinks it seems fair that she be required to repay the money, because the money was the benefit for which the employer bargained in the settlement.  The rest of us, however, might look at it as being pretty heavy-handed, because the money was the whole benefit for which Wong bargained, whereas confidentiality was just a portion of the benefit the employer was supposed to receive, in a settlement that doubtless also included a dismissal of her discharge grievance, and a full and final release of her other claims.

One might reasonably question the enforceability of such a clause, on a couple of bases, and I look forward to seeing how the appellate courts look at the question, if they do, but here's the far more troubling aspect:  Jan Wong was not permitted to participate in the hearing.

This goes back to the whole 'you can't sue your employer' issue for unionized employees.  The employment relationship is one between the union and the employer, and the employee isn't a party.  Almost all issues in the employment relationship are to be determined as between the union and the employer.  And this settlement was part of the employment relationship, so came into the same framework.  The employer can grieve to the union, and the union has to represent the bargaining unit member.  Even though she's no longer a bargaining unit member.

Wong sought standing to participate in the hearing, was denied, and unsuccessfully applied for judicial review.

End result:  The employer is seeking financial recovery from Wong, but Wong relies on the union for representation (which is only obligated to defend her up to the limits of the duty of fair representation), notwithstanding that she's been out of the bargaining unit for five years.  In short, she isn't a party to the settlement, she isn't a party to the arbitration, but at the end of the day, it ultimately falls to her to pay the award.

That's pretty hard to accept.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

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