Penalty for breaching non-disparaging clause

Penalty for breaching non-disparaging clause

Penalty for breaching non-disparaging clause

In a recent decision of the Employment Relations Authority (“the Authority”), the Authority has found that an email containing disparaging remarks about an employer breached the record of settlement between the employer and an employee.

In this case, Mr Norton (the employee) and Silver Fern (the employer) signed a record of settlement after reaching settlement at mediation.

The record of settlement required the parties to speak about each other in positive or neutral terms so that they did not disparage the other party.

About two months after the settlement, Mr Norton sent an email to five people, including one employed by Silver Fern. The Authority says that in that email Mr Norton made disparaging comments about Silver Fern.

Member van Keulen held that he was satisfied that the comments were disparaging and that the email breached the Record of Settlement.

The Authority made a compliance order pursuant to section 137(2) of the Employment Relations Act 2000 (“the Act”) and held it appropriate to impose a penalty against Mr Norton pursuant to section 149 of the Act for breaching the record of settlement.

The employee was ultimately ordered to pay a penalty of $2,000, with $1,500 to go to the employer and $500 to the ERA.  It was held appropriate that part of the penalty be paid to Silver Fern as it suffered the impact of the breach and had been obliged to take steps to enforce its rights.

This penalty was decided appropriate by the Authority based on:-

  1. an application of the factors stipulated at section 133A of the Act;
  1.  the four stage approach adopted by the Employment Court, including assessing whether the breach was blatant and deliberate and the severity of the breach (whether there was any quantifiable loss or damage to reputation); and
  1. the need for general and particular deterrence and the desirability of broad consistency with other penalties in similar cases.

This case highlights the importance of complying with all terms of agreed records of settlement and the repercussions if such terms of settlement are breached.

The AWS Legal Employment Team can provide you with advice and guidance on this topic and all other facets of employment law.

Jeanie May Borsboom (Labour Inspector) v Preet Pvt Limited and Warrington Discount Tobacco Limited [2016] NZEmpC 143

David Lumsden v Skycity Management Limited [2017] NZEmpC 30

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