Thursday, 15 May 2014

The Enforceability of Grievance Settlements – A Good News/Bad News Story

Two recent decisions from administrative decision-makers shine a light on whether a settlement among an employer, an employee (or grievor) and the employee’s trade union is the end of the story or not.  Just how enforceable are the terms of those agreements? Sadly, it depends on the terms of the agreement and the nature of the dispute.

The Globe & Mail terminated the employment of long-time correspondent Jan Wong (the “Grievor”) in or about late 2007. Her union, the Communications Energy and Paperworkers Union of Canada, Local 87-M (the “Union”) filed grievances on her behalf challenging the employer’s denial of sick leave and claiming that her discharge was without just cause.  In the course of an arbitration hearing on the grievances, the parties engaged in negotiations.  The Grievor was represented by the Union’s counsel, but had also retained her own lawyer, who provided her with individual advice during the negotiation process.  After passing various versions of a Memorandum of Agreement (the “MOA”) back and forth, the parties arrived at a settlement of the grievances.  As part of the MOA, the parties agreed to a time-limited non-disparagement clause, as well as other provisions limiting disclosure of the terms of settlement:  the Grievor was permitted to disclose the employer’s acknowledgement that she had been ill and unable to attend work, but neither party was “to disclose the terms of settlement” aside from that fact.  The MOA also dealt with the consequences of a breach: 
Should the Grievor breach the obligations set out in paragraph 5 and 6 [dealing with non-disclosure], Arbitrator Davie shall remain seized to determine if there is a breach and, if she so finds, the Grievor will have an obligation to pay back to the Employer all payments paid to the Grievor under paragraph 3.
The Globe & Mail was aware during negotiations that the Grievor planned on writing a book about the situation, so the non-disclosure language was a key element of the MOA from the employer’s perspective.  In 2012, the Grievor self-published a book, which included references to the fact that the employer had made a sizeable payment to her, although she did not indicate the actual amount she received.  The employer brought the matter back before Arbitrator Davie to obtain an order that the Grievor repay the moneys.  The Grievor offered testimony that she thought she was only prohibited from disclosing the “precise terms” of the settlement, and that she was unaware that she could not even disclose the fact of a payment.  She had a lawyer review her book prior to publication for any libel concerns, but never asked the Union’s counsel or her own lawyer whether the content might violate the non-disclosure provision of the MOA. 
At the arbitration hearing, the Union argued that the Grievor’s breach of the MOA was, at most, technical, and that the repayment provision should not be enforced in any event as it was punitive and unconscionable.  Arbitrator Davie rejected both of these arguments, citing jurisprudence from arbitrators, the Ontario Labour Relations Board and human rights adjudicators that stood for the proposition that freely negotiated settlements should be upheld in the interests of labour relations and to not discourage other parties from reaching compromise.  Moreover, non-disclosure provisions “are also a recognition of the fact that parties settle grievances for a variety of reasons which may be unrelated to liability or wrongdoing” (para. 26).  The Arbitrator also rejected the suggestion that the MOA was unenforceable, as the Grievor had experienced legal representation, her own lawyer, and was sophisticated enough to participate in the negotiation of the MOA.  Importantly, the Arbitrator found (at para. 48):

At the hearing the grievor testified she misunderstood the scope of her nondisclosure obligations under the MOA.  If that is the case, responsibility for that rests with her.  In the circumstances of this case it would be inappropriate to set aside a comprehensive settlement, negotiated over a lengthy period of time, which in clear, unambiguous and objective language sets out what the nondisclosure obligation entails merely because of the grievor’s subjective opinion and what she “thought” her nondisclosure obligations to be.
In the result, the Arbitrator found that the disclosure of a payment was in violation of the non-disclosure provision and enforced the terms of settlement, ordering the Grievor to repay the monies she had received from the Globe & Mail. [Globe and Mail, a Division of CTV Globemedia Publishing Inc. v. Communications, Energy and Paperworkers Union of Canada, Local 87-M, Southern Ontario Newspaper Guild (Breach of Memorandum Grievance) (2013), 233 L.A.C. (4th) 265 (Davie).  Note:  given that the Grievor brought an application for judicial review in relation to a preliminary decision of Arbitrator Davie already, it's entirely possible that the final decision will also go before the courts.  Stay tuned...]

In the decision in Knipfel v. The Regional Municipality of York (“Knipfel”), however, another employer’s attempt to rely on the terms of a negotiated settlement were not so successful.  In Knipfel, the employee was a paramedic whose employment was terminated in August 2012.  His union filed a grievance on his behalf, and the employee also made an Application to the Human Rights Tribunal of Ontario (the “HRTO” or the "Tribunal").  Ultimately, the employee (the “Applicant”), the Municipality, and the Union negotiated Minutes of Settlement (“MOS”) resolving both the grievance and his Application to the HRTO.  As part of the MOS, the employer agreed to provide a neutral employment reference to the Applicant.  The MOS also provided that its terms constituted “full and final settlement of any existing, planned or possible complaint(s) against, including any outstanding or contemplated Human Rights Tribunal application, the Employer or its representatives.”  The Applicant also signed a Release, which provided that the payment contemplated by the settlement was in consideration of “full and final settlement of any existing, planned or possible complaint(s) against [the employer] under the Ontario Human Rights Code up to the date of execution of the Release, arising out of or in respect to his employment.”  The Arbitrator who had been scheduled to hear the grievance was to “remain seized” of any issues arising from the MOS.
Subsequently, the Applicant brought a new Application to the HRTO, alleging discrimination in the form of a negative employment reference he had received from the Municipality.  The employer argued that the Application should be dismissed as the Applicant had signed a Release, and the Application was therefore an abuse of the Tribunal’s process.  The employer also argued that the parties’ agreement that the Arbitrator “remain seized” (i.e., was to be the sole adjudicator of any issues arising under the MOS) meant that the HRTO was without jurisdiction to hear the Application.

Vice-Chair Sheri Price dismissed both arguments.  First, it was clear on the face of the Release that it was only to cover complaints that related to events “up to the date of execution of the Release”, and not any alleged future breaches of the Human Rights Code.  It would be contrary to public policy to allow an individual to waive or contract out of his or her rights prospectively, so the Release could not have this effect.  With respect to the argument that the Arbitrator had exclusive jurisdiction, the HRTO pointed out that the MOS related not only to the Applicant’s discharge grievance, but also resolved his Application to the Tribunal.  Given that his allegations amounted to a claim that a prior settlement of a Human Rights Code complaint had been breached, section 45.9 of the Code granted the Tribunal jurisdiction to hear and decide that issue.  Once jurisdiction is granted to the HRTO, parties to a private agreement cannot deprive the Tribunal of its statutory jurisdiction.  Even if the issue of the alleged violation of the MOS had been brought before the Arbitrator, the HRTO would still have concurrent jurisdiction under the Code.
In the result, the employer’s request to dismiss the Application was denied and the Application was permitted to proceed through the HRTO process.

The lesson to be learned?  When crafting settlement documentation, it is generally advisable to get legal advice, particularly where large sums of money may change hands, the underlying dispute needs to be kept confidential, and/or a human rights issue is involved.  Obviously, any non-disclosure language should be paired with a clause that identifies the consequences of a breach.  However, it’s also wise to consider whether to require full repayment, or some lesser sanction for a violation of the agreement.  There have been cases where arbitrators have reduced the amount of repayment on the basis that the clause in question amounted to an unfair penalty.  On the other hand, ‘bundling’ the settlement of a grievance together with the resolution of an HRTO Application may have an unforeseen downside.  Before entering into a global settlement, discuss your options with counsel.
If you have a question about this post or have a labour relations issue you’d like to discuss, please don’t hesitate to contact Lance Ceaser.



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