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Can an employer fire an employee without cause and tell them that the reason for his departure from the company is strictly confidential? What if it's part of a settlement agreement? For example if there was a signed contract stating "employee will not disclose how his employment with the company ended, in exchange for 1 month's pay". Could the employee disclose that they were not fired for cause, or would this still be too specific and breach the confidentiality agreement?

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  • That clause seems weird. In contracts I know this would read "the employment ended by mutual agreement", which is literally what both parties signing a settlement agreement is. Mutual agreement. Not being able to talk about it is just enforcing even more mystery and inviting even more questions. Why would anyone, employer or employee, want that in a contract?
    – nvoigt
    Commented Oct 5, 2023 at 9:37
  • Aren't "fire an employee without cause" and "tell them the reason" contradictory? Commented Oct 5, 2023 at 11:07
  • I don't see why any agreement is needed. If the company doesn't give a reason the ex-employee can only say "they didn't tell me" which is much simpler than "I am not allowed to tell you." Commented Oct 5, 2023 at 11:15
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    @WeatherVane "without cause" isn't the same as "for no reason." An employee who is fired for incompetence or drinking on the job or absenteeism or embezzlement is fired for cause. An employee who is fired for budgetary reasons of for being black or because the boss was just in a pissy mood is fired without cause.
    – bdb484
    Commented Oct 5, 2023 at 11:21
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    In plain English, they are the same, but "for cause" has a special meaning in the context of employment law -- essentially that the employee's conduct made it fair for the employer to terminate him.
    – bdb484
    Commented Oct 5, 2023 at 11:28

1 Answer 1

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Non-disclosure agreements are lawful

So, if the employer and the ex-employee have entered a contract (subject to all the usual criteria) which contains a non-disclosure clause about why the relationship ended, there is no reason why a court would not uphold it.

So, for your situations:

Can an employer fire an employee without cause and tell them that the reason for his departure from the company is strictly confidential?

No, this would not create a contract because the employer has given no consideration and the ex-employee has not agreed to it. However, if the employee was already under a contract that imposed this obligation, say their initial hiring contract contained such a clause, they would be bound not to disclose it.

What if it's part of a settlement agreement?

Yes.

Could the employee disclose that they were not fired for cause, or would this still be too specific and breach the confidentiality agreement?

That would depend on the wording of the non-disclosure clause. If the clause were broad enough, even saying that might be a breach.

Please note, that there are situations where it would not be a breach of contract for the ex-employee to break the NDA. For example, in , it is unlawful to limit a workplace right - such as the right for an employee to have the fairness of their dismissal reviewed by the Fair Work Commission. Disclosing the circumstances of the dismissal for that purpose would not be a breach of contract because you cannot contract outside the law.

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