We can all mutter things under our breath about other folks at times.

That driver who cuts us off. The waiter who doesn’t bring us our food. The strawberry jam manufacturers who screw the jar lids on too tightly.

Muttering such things doesn’t normally get us into trouble. We let off some steam, and that is that.

But what if you have previously agreed not to speak badly about someone else?

In the employment context, agreements like this between employers and employees are common.

And the result is that if you breach that agreement, you might end up paying for the privilege.

AGREEMENTS NOT TO SPEAK BADLY

Disputes between employers and employees are often resolved by agreement.

Those settlement agreements often include promises not to speak badly of each other.

Why is this promise included?

If a dispute has arisen, it often means there is a breakdown in trust in the employment relationship. When that trust is gone, so is the faith that the other side will represent you well.

So each party wants protection against the possibility the other side will slander them. They have reputations to protect. The settlement agreement is an opportunity to get that protection.

What does the promise look like?

The promise not to speak badly gets included in the form of a clause like this:

Neither party will speak ill of the other to any third party.

There are of course variations on this theme. But at its simplest, its about not saying anything bad to others about the other side.

How can it lead to a penalty?

Mediators from the Ministry of Business, Innovation and Employment will often be asked to countersign settlement agreements.

One effect of their signature is to lock the parties into their agreement, even if one side fails to do their part.

Another effect is that a party who breaches the settlement agreement can be made to pay.

A penalty for an employer who is a company can be up to $20,000. For an individual employee, it can be up to $10,000.

Two cases illustrate how penalties can arise, regardless of whether you are the employer or the employee.

AN EMPLOYER SPEAKS BADLY

In one Employment Court case, an employer and employee agreed to not speak badly of each other after parting ways. They specifically agreed not to speak badly to other staff.

But immediately after the employee left, his manager put a note in the employee’s HR file.

After the question “Would you re-employ?”, the manager ticked “No”.

And under the section allowed for the manager to insert comments, he wrote:

Outstanding performance issues, staff and customer complaints. Not a team player, major attitude change, became very difficult to manage as he wouldn’t follow management’s directions. 

The former employee subsequently applied for different roles in the organisation. He was turned down each time. He learned that the note on his HR file deterred the company from employing him again.

The Employment Court considered the note on the HR file breached the obligation not to speak badly. The Employer was penalised $7,500 (which included penalties for other related breaches).

AN EMPLOYEE SPEAKS BADLY

In a separate case before the Employment Relations Authority, it was employee who broke the settlement agreement.

Again the employer and employee had partied ways on agreed terms. Those terms included an agreement not to speak badly of each other.

After he left his employment, the employee sent an email to various people. The email alleged that the employer should not be supported. He advocated a boycott of the employer’s products.

The Authority had no trouble in deciding the employee breached the agreement. The employee was penalised $2,000.

CONCLUSION

The takeaway here is to be mindful of what you include in the terms of settlement you reach. If you agree to not do something, be careful to observe that obligation.

In relation to agreements not to speak badly, think about how this may limit you. What can or can’t you say? And to whom?

If you have reservations about such restrictions, agree to wording that you can stick to. No point agreeing to something that you know you won’t follow through on.

Do these cases surprise you? Were you aware that these obligations have consequences?