This year saw a high profile court case between former Network Ten political editor, Dr van Onselen, and his former employer Network Ten, over a non-disparagement clause that formed part of an agreed employment settlement Deed of Release upon completion of his tenure. The outcome of the case may have far reaching repercussions and brought into focus an almost universally applied but sometimes underestimated legal restraint.

In this case, Dr van Onselen’s employment with Network Ten concluded in March 2023, on the terms set out in a Deed of Release. Both parties agreed not to disparage the other or make any statement or publication, whether oral or in writing, which brings the other party into disrepute or ridicule or which might otherwise adversely affect their reputation.

However, a few months later (May 2023), van Onselen wrote an article which was published in The Australian about his former employer and its financial performance and viability, with regard to Paramount (Ten’s US parent company).

In response, his former employer Network Ten applied to the Supreme Court of NSW for urgent injunctive relief on the basis that the article was in breach of the non-disparagement clause of the Deed as it disparaged the Employer’s financial position, the viability of its US parent, its Australian brand and its management.

What is a non-disparagement clause?

Such clauses can take many forms but simply put, a non-disparagement clause provides that you won’t say anything negative about the company or its products, services, or leaders in any form of communication that could adversely affect its reputation. This clause is almost universal in deeds of release, or other forms of agreement relating to employment separation or settling employment disputes. It is also becoming increasingly common and can apply to employment settlement deeds, employment contracts, agency and licensing agreements, sponsorship agreements and even commercial settlement deeds.

It’s worth noting that van Onselen’s understanding of this clause was that it would not impede his ability to provide fair comment about Network Ten as a journalist and commentator. He also argued that whilst the clause pertained to statements in bad faith, the intention of the article was to stop negative commentary about his employment, the Employer and his termination. Furthemore, he argued that the article consisted of publicly available information and that the clause effectively operated as a restraint of trade that impinged on his right of free speech, consequently preventing him from exercising his professional occupation.

However, given there was no exception for disparagement that could be considered fair comment in the Deed, as well as the fact that several implications made in van Onselen’s article could “self-evidently undermine the confidence of investors”, the Court determined there had been a breach in contract.

What does this mean for you?

Whilst these non-disparagement clauses exist to protect the reputation of both individuals and businesses as both have an interest in ensuring their reputations are not damaged by the other moving forward, if misunderstood these clauses can lead to disputes and litigation. Whether you are a business owner or operator, or employee, it is vital to ensure any non-disparagement clause that applies to your team or yourself is astutely planned, carefully structured and understood.

Planning a non-disparagement clause means thinking ahead and evaluating the potential impact it can have not only for the businesses, but also for the individual tethered to it. It’s important to provide a bespoke non-disparagement clause to take into account the employee’s future endeavours and the practicalities of compliance with the obligations.

In the context of standard form employment agreements it is no longer only high-level executives sitting in corner offices who are restrained. Corporates such as Qantas have tried to place non-disparagement obligations on employees at all levels, effectively seeking to silence both existing and exiting employees.

There are arguments that such clauses could be challenged as “unfair contracts” from a consumer perspective or in the same respects as restraints of trade and would require the employee to show that the clause is necessary and proportionate to protect the legitimate business interest of the employer.

For example it can include considerations such as employee workplace reviews on online forums such as GlassDoor, or an employee posting a negative review of a product, through to a former employee providing analysis on financial performance, share prices and more. Conversely, it can also encompass what employers can say in response to reference checks and in casual discussions about former employees.

It is important to consider the potential impact the terms of a non-disparagement clause might have for a particular person or organisation over a longer period of time. Ideally it should be a tool that protects the reputation of both the employee and employer, as well as empower the employee to move forward and progress professionally.

This balance between protection and progress can be a fine line, particularly in sectors where employees are paid to express thoughts on organisations. For example: if an investment analyst who provides public market updates from Bank A is hired by Bank B to do the same in their new role, they may discover there is a conflict in the obligations to their previous employer and in their new role.

This situation may apply to many sectors, from media to finance and more, but can be addressed with awareness of the parameters of any relevant obligations. It may also be worth considering whether the presence of the non-disparagement obligations should be included as a carve out in the confidentiality provisions to enable an ex-employee to disclose their restraint to a new employee.

Regardless of industry or the type of business, the case of Network Ten Pty Limited v van Onselen [2023] reinforces the need to ensure foresight, precise drafting, consideration of relevant carve-outs and to make sure that all relevant parties entering into agreements or deeds have a comprehensive understanding of the obligations.

If you have any questions or would like to find out more about how to protect your business, feel free to contact us at Antcliffe Scott, we’d be more than happy to help.