Derbyshire County Council (DCC) has been ordered to reveal the payout given to its former chief executive.
The authority has been warned by the Information Commissioner that it could be in contempt of court if it fails to disclose the sum awarded to Nick Hodgson.
DCC has launched an appeal against the order and said the information would be revealed in its annual accounts.
Mr Hodgson left the authority in June 2013.
Three months later, a Freedom of Information request was submitted to DCC about why Mr Hodgson left his £152,000 role and details of any payout. But the authority failed to answer, saying Mr Hodgson had entered into an agreement which meant the terms of his exit would “remain confidential”.
In a report, Andrew White, group manager at the Information Commissioner’s office, ruled DCC had “incorrectly” withheld the details.
He added: “The Information Commissioner requires the authority to disclose the information.
“Failure to comply may result in the Information Commissioner making written certification of this fact to the High Court and may be dealt with as contempt of court.”
Campaigning resident John Evans lodged the complaint with the Information Commissioner.
Mr Evans said: “DCC is guilty, in my view, of practising double standards by on the one hand claiming that it is committed to openness and transparency in its activities while on the other hand not giving details of any settlement reached on behalf of taxpayers.
“The authority’s decision to appeal against the order by the Information Commissioner is a continuation of its attempt, in my view, to prevent the public from knowing and understanding what happened to Mr Hodgson.”
A DCC spokesman said: “We’re still going through a formal process with the Information Commissioner and it would be inappropriate to comment until the process has been concluded.
“It was always our intention to release details of the sum paid to Mr Hodgson in our annual statement of accounts, as we are statutorily obliged to do.“