Are non-disparagement clauses enforceable? – The Globe and Mail

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THE QUESTION

I’m about to sign an employment contract with a new company but the contract has a “non-disparagement clause” that says I’m never allowed to say anything bad about the company to anyone else, even if it’s true. This seems concerning. What if I have a bad experience there and quit, then someone in my network asks what my experience was like? What if something illegal happens and I want to report it to the authorities? Is a non-disparagement clause actually enforceable and should I sign a contract that contains one?

THE FIRST ANSWER

Harshini Arumugam, associate, Pink Larkin, Halifax

A non-disparagement clause in an employment contract is meant to ensure that an employee does not make negative or critical comments about their employer. This can include verbal or written statements, whether in person, online or through other means. If a non-disparagement clause is breached by an employee, the employer may have cause to terminate their employment and may even be able to sue the employee for breaching the contract.

A non-disparagement clause usually applies even after an employee leaves their employment with the employer, either by resignation or termination. While you can make truly neutral or factual statements, employees should still be careful to ensure that those comments are not “disparaging”. Even statements that are true, if damaging to the employer’s image, may still be considered disparaging.

A non-disparagement clause cannot prevent you from reporting illegal activities. An employer cannot make an illegal contract, which means they cannot prevent you from reporting illegal activities through any contract clause. Before reporting, it is best to consider whether the activity in question is truly illegal and whether there are internal avenues to address your concerns.

A reasonably drafted non-disparagement clause that you’ve agreed to is generally enforceable. It is your choice to sign an employment contract with a non-disparagement clause. However, like other clauses in an employment contract, a non-disparagement clause can be negotiated. The clause could be made mutual, for example, to apply to your employer, as well. You could also negotiate to have the clause removed. As with any other negotiation, there is no guarantee of a result.

THE SECOND ANSWER

Katie Ahn and Megan Goldie, Carbert Waite LLP, Calgary

Non-disparagement clauses are common in contracts and are generally enforceable in Canadian law. These provisions mean that you agree not to make negative statements about your employer and sometimes other employees even if they are true.

Depending on the wording of the clause, the consequences of making negative statements about the employer to others could include termination of your employment, a lawsuit for breach of contract or a court order restraining you from continuing to make negative statements.

A non-disparagement clause will not usually prevent you from speaking about your experiences to immediate family members and support people such as doctors, counsellors, spiritual advisors or your legal and financial advisors. A court may, however, enforce these clauses if you are making negative comments about the employer to your wider network or on social media.

They are also not enforceable to suppress reports of discrimination, workplace safety concerns, whistleblower complaints, reporting misconduct to professional regulators or reporting criminal conduct. Contracts that impede those rights are against public policy and will not be enforced. Statements made in court or other tribunal proceedings cannot be used in other lawsuits to punish the person who made them. In these situations, employees will be protected if they make true factual statements.

It is always wise to have a lawyer review the specific wording of your contract before signing. A lawyer can also help negotiate wording that makes you more comfortable by including one or more of the exceptions above in the clause.

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