Contract & Property Law, Employment Law

20140511 Expensive non-settlement

Every settlment agreement, especially in an employment law context, contains a confidentiality clause. That means neither party is allowed to disclose the details of the settlement to a third party. Certain groups are usually exempt from that obligation, such as close family members and legal advisers or pay roll staff, who were involved in the dispute, but need to know about the outcome for obvious reasons.

Now, when one party breaches the confidentiality clause, the other party can take steps to enforce it or ask for a remedy. The problem is that the agreement never stipualtes what those remedies are. It also very much depends on the individual circumstances what ‘damages’ the other party suffers when the terms of the settlement are disclosed. If its a high settlement involving a government agency and its all over the news, there could be some reputational damage. But how to quantify that and, in the case of the public sector, would the ageny then want to be seen spending even more money in litigation trying to enforce the confidentiality clause? Probably not.

Things are different though when the breach occurs before the settlement payment is made. In that case, the other party can not only point to the breach, but also still has the means to remedy it, i.e. not paying the agreed amount. One would be very dumb to brag about a settlement payment prior to receiving it, but this what happened here:

There are few lessons to be learned from this story, the most important one probably being that you should not tell your teenage children about such highly sensitive work matters until it is safe to do so.