The Employment Court has held that the NZTA’s breach of a non-disparagement clause was not justified by the NZTA’s consideration of issues under the Health and Safety at Work Act 2015.
Ms Byrne was employed by the NZTA. After complaining she was being bullied she entered a Record of Settlement with the NZTA and resigned. The Record of Settlement contained a confidentiality and non-disparagement clause. Ms Byrne later commenced employment with Opus and was directed to work on a project overseen by the NZTA (Project). The NZTA had a contractual right to require Opus to not have a person work on the Project if that person was deemed unsuitable for good reason.
Concerns were raised by employees of the NZTA about having to work with Ms Byrne again. The NZTA requested that Opus remove her from the Project but would not give reasons. The NZTA’s employees told Opus that Ms Byrne’s employment with the NZTA had involved an employment law related matter and a confidential settlement. Opus was concerned about losing the Project’s work, so informed Ms Byrne that she was no longer required. The Opus Business Manager told her: “you must have done something really bad for NZTA to request this.”
The Employment Court found that the non-disparagement clause only applied to the employment circumstances which had existed up to the point of resignation. Nonetheless, the Court held that the requests to remove Ms Byrne were disparaging and did amount to a breach of the Record of Settlement. The Court reached this finding due to the following factors:
- The NZTA did not provide any reasons why Ms Byrne should be removed;
- This confused Opus as Ms Byrne had no performance or conduct issues;
- After speaking to the employees, Opus inevitably reached the conclusion that the “employment law matter” was the reason for the removal request and must have been serious.
The NZTA argued it could request Ms Byrne’s removal on health and safety grounds, and that the Record of Settlement could not prevent either party from meeting their Health and Safety at Work Act (HSWA) obligations. However, the removal requests were not framed in health and safety terms, and if the requests were health and safety related then the NZTA had an obligation to consult, co-operate with, and co-ordinate activities with Opus. In this scenario the Employment Court said this would have required a “constructive dialogue” about Ms Byrne. The Court was not convinced any issues under the HSWA justified the disparaging statements that breached the Record of Settlement.
The Court made a declaration that the NZTA had breached the Record of Settlement and made an order requiring the NZTA to comply with it. However, it did not order a penalty, finding that the equities of the situation were satisfied by the declaration and compliance order.
Employers should always be mindful of the obligations owed to ex-employees under a Record of Settlement. This is especially so when continuing to interact with that ex-employee, which could occur if the industry is small. In this case, the fact that the NZTA’s employees were aware of the Record of Settlement and were able to inform the Opus managers of its existence contributed to the NZTA’s breach. When negotiating and entering a Record of Settlement employers should keep the number of people aware to the bare minimum. They should also ensure that those employees who are aware of the settlement are also made aware of any confidentiality and non-disparagement obligations that may apply to them or to the employer generally.