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During the recruitment process, employers want to present their best side to prospective employees in order to entice top talent to join them. Employers can potentially expose themselves to litigation for representations made or made on their behalf that are misleading and deceptive and later relied upon by prospective employees in the recruitment process.

The Australian Consumer Law (ACL) provides that it is illegal for a business to engage in conduct that is misleading or deceptive, or is likely to mislead or deceive. The ACL also specifically prohibits misleading and deceptive conduct in recruitment. Section 31 of the ACL provides that in relation to employment that is to be offered, a person must not engage in conduct that is liable to mislead persons seeking the employment as to:

• The availability of the employment;
• The nature of the employment;
• Terms or conditions of the employment; or
• Any other matter relating to the employment.

Examples of conduct which may be caught by this provision include:

• Representations about the length of a contract;
• Statements about future remuneration;
• Statements about the financial standing of the employer; or
• Statements about the size of the employer;

Penalties may apply where it is found that an employer engaged in this unlawful conduct: up to $1.1 million for a body corporate or $220,000.00 for individuals.

Two recent cases in the Federal Circuit Court (the Court) demonstrate what the Courts will consider in these types of claims of misleading and deceptive conduct.

Smrdelj v CSL Limited [2017] FCCA 2789

The employee was a Quality Assurance Manager for a different employer when she was contacted by the employer to join them in a potential new role. Before commencing employment, the employee held discussions with the employer about joining the company and the new position. In May 2015, the employee resigned from her previous employment and in July 2015 she started with the employer as a Director in the Manufacturing and Operations group.

In March 2016, the employer underwent a restructure and as a result, the employee’s position was made redundant.

The employee claimed that the employer had engaged in misleading and deceptive conduct during the recruitment process in contravention of the ACL by representing to her that there would be a position for her at the employer until her retirement.

The employee claimed that in the initial telephone discussion she had indicated to the employer that any job she would move into needed to take her through to retirement. She alleged that she was told that a position with the company would take her “beyond her retirement years” and that it was “in a much better position to offer employment longevity”.

The Court preferred the evidence of the employer regarding the nature of the discussions which where introductory and general in nature. The Court noted that the employee had extensive experience as a general manager and had conceded that there would always be the prospect of restructures and redundancies.

Accordingly, the Court found:

In all of the circumstances and viewed as a whole, the conduct of CSL could not have conveyed any meaning, message or representation that Ms Smrdelj’s job at CSL “would take her through to retirement” nor was it misleading or deceptive, or capable of being so.

Interestingly, the Court held that that longevity and job security were not drivers which the employee relied upon, rather the employee had pursued a position with CSL because it was effectively a promotion, which offered increased remuneration in a larger and more reputable company. The claim was dismissed.

Maxutova v Nunn Media Pty Ltd [2017] FCCA 2336

In this matter, the employee was approached by a recruiter on behalf of the employer about a vacancy in the position of Head of Strategy. The employee resigned from her previous employment to take up this position but her employment was terminated within the probation period for her poor performance.

The employee alleged that the employer engaged in misleading and deceptive conduct in breach of the ACL and that the recruiter, on behalf of the employer, had made representations during the recruitment process including that the role was for a person who was looking for a long-term position and the hire would be a long-term commitment by the employer.

The Court held that the representations made were of a general kind and there was no evidence that they were untrue. In particular, in relation to the claim of a long-term position, the Court held that:

As a person who is used to being in senior roles, the applicant would have known that just because the respondent was seeking a person to be employed on a long-term basis, does not mean that the employee is immune from the employer’s right to terminate the contract in accordance with the terms of the contract.

The Court held that the evidence showed that the employee did not rely upon the representations when leaving her previous employment to join the employer. Rather, the Court found that employee was aware that a key client contract with her previous employer was to expire and she delayed her resignation so she could be paid a redundancy payment before commencing her new position with the employer.

Accordingly, the Court held that the employer did not engage in misleading and deceptive conduct.

Lessons for employers

Employers should carefully draft employment contracts to clearly state that the agreement supersedes all prior agreements and negotiations and that the employee acknowledges that they have not relied upon representations made regarding employment.

While the employees in these matters were unsuccessful in their claims of misleading and deceptive conduct, employers and recruiters engaged to act on behalf of employers should be aware of the potential liability in making representations during the recruitment process.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.