Misleading and Deceptive Conduct of Employer

Misleading and Deceptive Employment Conduct in Australia

Misleading and deceptive representations before or during employment often lead to disagreements. Whether it is employers misleading employees about their salary or benefits, or employees falsely representing their fitness.

In this article, our workplace rights lawyers explore the concept of misleading and deceptive conduct in employment. We will look at both the Fair Work Act, the ACL and misrepresentation under Common Law.

What It Means to Mislead or Deceive Employees under Workplace Law

Misleading and deceptive conduct in employment occurs when individuals or businesses provide false information. Or, they may fail to disclose important details during the hiring process. This can have serious consequences for both parties involved.

To mislead or deceive someone is to:

• tell half-truths by stating some correct information but leaving out important details

• intentionally or unintentionally tell someone something that isn’t true

• exaggerate the truth

• knowingly or recklessly make a promise that you know you can’t keep

In Australia, there are laws that make it unlawful to mislead employees and employers. The relevant laws are:

• the Fair Work Act

• the Competition and Consumer Act

• Common Law

Misleading Prospective Employees under the Australian Consumer Law

The ACL, is part of the Competition and Consumer Act 2010. Deceptive and misleading conduct during the recruitment process is unlawful. Therefore, an employer may face accountability if they fail to fulfill promises they’ve made. Or, if they misrepresent things to entice you to accept a job offer.

Section 31 of the ACL prohibits a person from engaging in behaviour that may mislead persons in relation to employment. This includes the availability, nature or terms and conditions of that employment.

What is a ‘representation’?

People can experience disagreements when someone promises them something before they start a job, either in person or through email. Often, the employment contract mentions these promises, but the employer does not fulfill them. Or, the promise does not find its way into the employment agreement.

An employee can make a claim against their employer if the employer promises certain things to the employee. Here are some examples:

• earn a minimum salary or bonus or other future remuneration

• A certain minimum period of time must be completed in employment.

• be promoted within a specific time frame or have specific responsibilities

Misleading statements can also apply to statements about the employer’s business, like its profitability or size.

What is not a ‘representation’?

Consider descriptive or expected statements rather than relying on them as a formal representation. For example, an employer’s statement expressing their commitment to creating a positive work culture.

It doesn’t matter what the employer meant by the statement. What matters is, what would a reasonable person in the position of the employee believe?

Using words like “potential” and “opportunities” in a job description probably won’t deceive anyone. Statements of opinion can also convey the same idea.

Consequences of deceptive and misleading conduct under the ACL

If an employee suffers a loss because they relied on a false statement, they may be able to make a claim. The claim could be made under s 18 of the ACL or s 31 of the ACL.

Misrepresentation Fair Work Act

Sections 345 and 349 of the Fair Work Act prohibit persons from knowingly or recklessly making false or misleading representations about workplace rights or industrial activity. A breach of these provisions can entitle a worker to make a general protections claim.

General protections and workplace rights

Section 345 of the FW Act states that making false or misleading representations about workplace rights or the exercise of workplace rights is unlawful. For a person recklessly to make a false or misleading representation about the rights of another, the person must have made the representation either without believing it to be true or not caring whether it was true or false.

Employers must not make a false or misleading representation about the rights that a worker has or does not have.

This is a civil remedy provision, which means that individuals have legal recourse if they are victims of such misrepresentations.

General protections and industrial action

Section 349 of the FW Act deals with false statements regarding Union activity.

It’s against the law for employers to ask employees or job applicants if they belong to a union or industrial association. Employers cannot require someone to join a specific association or any other association to work at a certain place.

Misleading Employees under Common Law

Workplace law also includes Common Law. Common Law is law that judges make, not law contained in legislation passed by Parliament.

Under Common Law, an employee may be able to bring a claim for breach of contract. For example, if the promise is determined to be a statement or representation. Or, a statement that the employee will receive a certain level of remuneration.

This is because this statement would most likely become a term of the employment contract. This breach may entitle the employee to recover damages for loss suffered as a result of the breach.

An employer may have difficulty defending a claim by an employee where they recklessly make a false representation, it’s a term of the agreement and they don’t keep their promise.

Examples of Employer Misleading Employee

Let’s take a look at a couple of real-life examples to better understand employer misrepresentation and its consequences.

Example 1: False and misleading statements about bonus scheme

Morton v Interpro Australia Pty Ltd & Anor [2009] FMCA 423

Before entering into an employment agreement, a sales manager named Morton questioned the bonus scheme that would apply after his first year of employment. The manager of the employer told Morton that his bonus would be calculated using a specific formula.

Morton later wrote an employment agreement that didn’t mention the formula. A new management group assumed control of the company within a year of Morton starting work and introduced a less favourable bonus plan. Morton filed a lawsuit for contract violation. The court ruled that the formula was a part of Morton’s contract and was a legally binding promise.

Example 2: False representation about employer’s financial status

Moss v Lowe Hunt & Partners [2010] FC 1181

In another case, Moss joined an employer based on misrepresentations about its financial success. When he discovered the actual financial condition, he claimed damages. The court found the company guilty of making false and misleading statements, ordering compensation for Moss.

Employer may be liable for a third party’s representation

An employer may be responsible for representations made to prospective employees by a recruitment agency.

In O’Neill v Medical Benefits Fund of Australia, a senior executive was headhunted by an executive search company on behalf of an employer.

The Court found that the recruitment company made representations to the senior executive to persuade him to work for the employer. In particular, they said that his employment would be secure and for the long term.

The senior executive successfully filed a claim against the employer for misleading and deceptive conduct after his position was made redundant within two years.

Employees lying on their resume

Employees who exaggerate their resume or outright lie is a problem for employers. The same legal principles that apply to Common Law misrepresentation also apply to falsifying resumes.

This might apply when a worker says that they have held a particular role at a company, but they haven’t. Or, if the employee provides the details of a referee during the recruitment process, but that person is actually a friend and has never worked with the person.

If the untruth in the resume encourages or places undue influence on the employer to enter into a contract, the employee may have a problem. An employer that dismisses a worker in those circumstances will be likely to have good grounds to defend any claim.

Key Takeaways

Employers must know the dangers of deceitful behaviour during hiring. Promising or guaranteeing something to a potential employee without a good reason can make the employer legally responsible.

When recruiting for an executive or senior role, an employer should be careful to avoid making unfounded or unrealistic statements about the financial standing or prospects of the business. This is especially true if the business’s performance can affect the remuneration of these employees.

Protection can also be provided to employers by incorporating an “entire agreement clause” in their employment contracts. This clause states that the contract does not consider any previous written or spoken offers or statements. Instead, the written agreement replaces them.

Remember:

• employer misrepresentation is when employers make false promises to lure you into a job

• you can sue your employer for false promises under the Australian Consumer Law

• employee misrepresentation is when you provide false information about your qualifications or skills

• employers may not have the legal power to fire dishonest employees, but they can take disciplinary action

The employment relationship is one built on trust. By engaging in misleading and deceptive conduct, an employer or employee may be breaking down this important part of the relationship.

Employers must be transparent about the nature, terms, conditions, and other aspects of employment. And employees must make sure they are truthful about their resume and experience.

For legal advice on workplace investigations, contact Prosper Law at 1300 003 077 or fill out the form below.