September 29, 2014
The Ontario Superior Court recently issued a decision refusing to exercise its discretion to enforce the settlement of a wrongful dismissal claim when the employer discovered cause to terminate the employee shortly after signing the settlement.
The plaintiff employee worked as an estimator for the employer. The employee was terminated for alleged poor work performance but cause was not alleged. The employee commenced legal proceedings, seeking damages of $138,000. The parties agreed to settle the claim for $22,500 and partial payment of the settlement was issued.
Shortly after the minutes of settlement were signed, the employer was advised by a “whistleblower” that the employee had been doing work on the side for a competitor with some of the employer’s clients during work time while using the employer’s computer. The employer retained a forensic computer analyst that discovered the employee had in fact done the work on his work computer and then attempted to delete the files by using bootleg computer software. The employer then repudiated the settlement and refused to pay any further settlement money to the employee. In response, the employee filed a motion seeking to have the court enforce the minutes of settlement.
The court stated that as a matter of public policy, all settlements ought to be enforced unless enforcement would “create a real risk of clear injustice”.
The court concluded that the “cause” was not easily discoverable and a routine inspection of the workplace computer would not have revealed any basis for concern. The court further concluded that the employer never would have entered into the minutes of settlement had it been aware of the employee’s conduct. In the court’s view, the uncontroverted evidence of the employer that the employee was doing work on the side with the employer’s resources, when he should have devoted his time and efforts to the employer, coupled with the fact that the employee covered his tracks and then sued for wrongful dismissal, created a real risk of injustice to the employer if the court were to exercise its discretion to enforce the settlement. In refusing to enforce the settlement, the court also awarded costs to the employer on the motion.
This decision establishes that entering into minutes of settlement in a wrongful dismissal claim does not always mean finality in terms of escaping accountability for conduct that is otherwise worthy of cause for termination.
Ruder v. 1049077 Ontario Limited o/a Crowntech Aluminum & Glass 2014 ONSC 4389 (CanLII)