Breach of a confidentiality clause in a settlement agreement
The High Court recently held that breach of a confidentiality provision in a COT3 settlement agreement didn’t allow an employer to stop paying settlement sums
Finally something unrelated to COVID-19! In a recent High Court case between Duchy Farm Kennels Ltd v Steels an employee breached the confidentiality provisions in their ACAS-conciliated settlement agreement (COT3) by informing a former colleague about the terms of the settlement including the total sum and the instalments. The High court ruled that this breach didn’t allow the employer from paying the outstanding settlement sums provided for in the agreement.
The employer had agreed to pay the employee £15,500 in 47 weekly instalments of £330 and agreed it was in full and final settlement of his employment tribunal claims. The employee breached the confidentiality clause in the agreement. Once this breach was brought to the attention of the employer they stopped making payment because of the breach.
The employee issued court proceedings against the employer for failing to make payment as agreed in the settlement and the employer argued that because the employee had breached the confidentiality clause the outstanding sums were no longer due.
The High court held that the employer should continue to make payment to the employee in line with the COT3 because the confidentiality clause was not a genuine condition of the agreement (it wasn’t the significant benefit that the employer got under the settlement).
The High court noted that a confidentiality clause could be a condition of the agreement if it was drafted as one, particularly if confidentiality was the significant benefit that the employer got under the settlement and or a provision for damages in the event of a breach was made for.
This case highlights that breach of a generic confidentiality provision in a settlement is unlikely to be deemed a condition by the courts and provides pointers on how the clause could be drafted to be a condition of the agreement to increase the likelihood of the employer getting the protection they want.
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Posted on May 19, 2020