By Kelly Godfrey

The inclusion of non-disparagement clauses in settlement agreements and deeds of release are very common. The clause generally requires a party not to disparage or denigrate the other party after the conclusion of the employment relationship. But how enforceable are these clauses?

The issue was recently examined in the high-profile case of Network Ten Pty Ltd v van Onselen (2023). Dr van Onselen’s employment with Network Ten Pty Ltd (Ten) was terminated on terms set out in an agreed deed of settlement, which included the following non-disparagement clause: “…the Employee agrees not to disparage the Company or any of the Releasees or make any statement or publication, or authorise any other person to disparage or make any statement or publication, whether oral or in writing, which may or which does in fact bring the Company or any Releasees into disrepute or ridicule or which may otherwise adversely affect their respective reputations.”

However, a few months after signing the deed of settlement, Dr van Onselen published an article in The Australian, which Ten alleged breached the non-disparagement clause.

Dr van Onselen argued that the non-disparagement clause did not prevent him from making fair comments and only prevented statements made in bad faith that went beyond fair comment.

The Supreme Court disagreed and indicated that while fair comment was an available defence to a defamation action, it wasn’t to a breach of contract claim, where the non-disparagement clause contained no express exclusion for “fair comments”.

The Supreme Court also rejected Dr van Onselen’s argument that the clause was an unenforceable restraint of trade, as Dr van Onselen could still undertake his profession. In any event, the clause went no further than to protect Ten’s legitimate business interests.

The Supreme Court found Dr van Onselen’s article was not expressed in “neutral terms” and was in breach of the deed. The article contained:

• language such as “a role I walked away from”;
• references to plummeting sales and ratings; and
• comments indicating that Ten was “limping along with little attention paid to it by its overseas owners (or its domestic competitors to be frank)”.

It was held that the article was not merely providing the reader with publicly available information.

Nevertheless, the Supreme Court held an injunction was not required as the article was a one-off mistake with no real risk of a repeated breach.

This case demonstrates the importance of including non-disparagement clauses in deeds of settlement as a protection against denigrating comments by employees. They do have value and can be enforced.