Case summary: Breach of settlement

Cases / 18 November 2020
Case summary: Breach of settlement

The Employment Relations Authority (Authority) has ordered Presbyterian Support Central Charitable Trust (Trust) to pay penalties for breach of a Record of Settlement (ROS) agreed at mediation.

ROS terms commonly include confidentiality and “non-disparagement” clauses, and can be enforced with remedies including compliance action and penalties.  In a previous article we discussed an Employment Court case regarding breach of an ROS and non-disparagement, and here, similar terms were agreed.

Case details

In this case, the non-disparagement clause prevented both parties from speaking ill of the other. The Trust had agreed to provide the employee with a written reference confirming if a verbal reference was necessary, this would be restricted to comments in line with the written reference.

However, when prospective employers contacted the Trust, it said that it would not employ the former employee again, commenting that the former employee had not aligned with its values. As a result, three prospective employers withdrew their offers of employment.

The employee sought a compliance order and penalties against the Trust for breach of the ROS.  The Authority determined that the Trust’s verbal reference stepped well outside the agreed terms of the written reference, concluding that this amounted to disparagement.

The Trust was ordered to comply with the ROS and to pay $8,100 to its former employee and $2,700 to the Crown.

Message for Employers

This case highlights the need to take care in drafting ROS’s and ensuring both parties fully understand their obligations in doing so, given the risks in relation to breaches of the same are significant.

Please contact us if you require assistance in respect of settlements.

Disclaimer: We remind you that while this article provides commentary on employment law, health and safety and immigration topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.


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