Employment disputes happen. For some, litigation is required. For those that get resolved, parties can agree to a “full and final” record of settlement under the Employment Relations Act 2000. Once signed off by a mediator, that type of settlement is not only “full and final”, it cannot be cancelled.
Often parties agree in a settlement to a mutual “non-disparagement” clause. This basically means neither of them can say bad things about the other in the future. That doesn’t mean they can’t think bad things about the other person; but they just can’t tell others about those thoughts.
But what happens when a party does something to breach that sort of clause in a record of settlement? Does the other party have any recourse? In addition to enforcing the terms of a settlement agreement, a party can seek to have penalties imposed. These penalties can be significant; up to $20,000 against a company and up to $10,000 against an individual.
In Vice-Chancellor of Victoria University of Wellington v Sawyer  NZERA Wellington 106 the Employment Relations Authority ordered a former employee of the University to pay a penalty of $8,500. This arose out of the employee sending emails containing disparaging comments.
Dr Sawyer and the University entered into a record of settlement which included a mutual nondisparagement clause which also covered two individuals associated with the University. Dr Sawyer was alleged to have sent five emails containing allegations of serious dishonesty, professional incapability, professional impropriety, falsifying records, fraud and blackmail against the two individuals mentioned in the settlement.
The University sought the maximum penalty for each of the five breaches, totalling $50,000.
The Authority said there was a “clear need for punishment” to signal the Authority’s disapproval and “to act as a disincentive for others who may be inclined to breach their record of settlement obligations”. Among the factors considered, the Authority said the breaches were intentional and Dr Sawyer expressed no remorse. However, it imposed one overall penalty of $8,500 rather than five separate ones (and ordered $3,750 each to be paid to the individuals who were the subject of the disparaging comments and $1,000 to the Crown).
The Employment Court’s recent decision in Lumsden v Sky City Management  NZEmpC 30 is also noteworthy. In that case, a mutual non-disparagement clause was agreed to in a record of settlement. However, another clause was that, while Mr Lumsden’s employment would end as a result of the record of settlement, he could apply for future jobs within Sky City.
The Court found that Sky City had breached the record of settlement by recording in its HR system “NO” to a question “Would it rehire” Mr Lumsden. And the comments in the HR system went on to say that his employment had been terminated due to “performance issues, complaints and attitude problems”. This not only effectively prevented him from obtaining another job within Sky City, the comments were found to be disparaging.
Careful attention to the wording of non-disparagement clauses in records of settlement is needed, particularly as electronic communications and social media communications are the norm. And venting on social media, or failing to keep bad thoughts to yourself about someone you’ve agreed not to say bad things about can leave you in hot water.