Are NDA’s Enforceable in Ontario?

Non-disclosure agreements (“NDA’s”) are commonly used by employers to prevent employees from disclosing specific information to third parties.   Recently, these agreements have come under fire, particularly in the wake of the #Metoo and the Black Lives Matter movement and the Hockey Canada scandal. Some have argued that victims of sexual and race-based harassment are not able to speak about their experiences due to the consequences of breaking these agreements and that it enables wrongdoers to continue their pattern of behaviour towards other potential victims.

In light of these developments, we have commonly been asked by our clients whether NDA’s are enforceable.   For now, there have been no changes to the law regarding the enforceability of NDA’s in Ontario.  But this may change.  Prince Edward Island became the first province to enact legislation which would generally restrict the use of NDA’s in settlement agreements in certain instances involving discrimination, harassment or sexual misconduct cases. The law allows NDA’s only when it is ‘the expressed wish and preference’ of the survivor, subject to additional requirements. Notably, the agreement:

• must not be against the public interest,
• include an end date;
• and include a process for the survivor to waive their own confidentiality in the future.

Manitoba and Nova Scotia are considering enacting similar bills.  It remains to be seen if Ontario will follow suit.

For now, only limited changes to NDA’s have been tabled by the Ontario government.  In October 2022, the Ontario legislature introduced Bill 26, the Strengthening Post-Secondary Institutions and Students Act, 2022 which would ban the use of NDA’s that prevent Ontario colleges and universities from disclosing an employee’s sexual abuse of a student. This would not be retroactive and only apply to new agreements between the institution and another party.

While the bill has not been voted on yet, in its current form it proposes:

• the immediate termination of post-secondary staff who commit an act of “sexual abuse” as defined in the bill
• removal of a non-unionized employee’s ability to pursue a wrongful dismissal claim if they are terminated for sexual misconduct
• removal of a unionized staff member’s right to grieve their termination if they are terminated for sexual misconduct
• colleges and universities across Ontario will be required to implement a sexual misconduct policy which outlines rules regarding sexual behaviour involving employees and students.

If Bill 26 passes, it will amend Ontario’s Ministry of Training, Colleges and Universities Act and Private Career College Act, 2005. We will continue to monitor developments in the law regarding Bill 26, and whether Ontario will follow PEI’s lead in restricting the use of NDA’s in sexual misconduct cases.