Introduction

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

This question was submitted to the arbitrator in Centre de santé et de services sociaux du Sud de Lanaudière.(1)

Facts

In this case, the union had filed many grievances to contest an employee's various administrative and disciplinary measures, including her dismissal. To settle those grievances, the parties reached an agreement by which:

  • the employee's dismissal would be replaced by voluntary resignation; and
  • the employer would pay the employee C$5,000.

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

Months later, the employee's new employer contacted her former employer for references. When questioned on the circumstances of the end of her employment, the former employer stated that the employee had voluntarily resigned. However, when asked whether he would re-hire her, the former employer 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

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.

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 re-hire her. The arbitrator held that, based on the agreement, the employer should have indicated to the new employer only that the employee had voluntarily resigned – nothing more. The arbitrator indicated that by signing the agreement, the employer should have set aside his initial reasons for terminating the employee's employment, particularly if a future employer contacted him for references.

The arbitrator explained that if the employer was uncomfortable with this, he should not have agreed to act as a referee for the employee. Instead, the employer's actions violated the confidentiality clause and betrayed the employee's trust in the content of the agreement.

The arbitrator therefore agreed to hear the initial grievances that had been settled by the agreement. However, he did not decide on the issue of damages or the C$5,000 that the employee received from the employer.

Comment

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

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information on this topic please contact Alexandra Meunier at Fasken Martineau DuMoulin LLP by telephone (+1 514 397 7400) or email (ameunier@fasken.com). The Fasken Martineau DuMoulin LLP website can be accessed at www.fasken.com.

This update was reprinted with permission from Northern Exposure, a blog written by lawyers in the labour, employment and human rights group at Fasken Martineau, and produced in conjunction with HRHero.com.

Endnotes

(1) 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).