Misleading and deceptive representations during the recruitment process or during employment often lead to disagreements. Whether it is employers misleading employees about their salary or benefits, or employees falsely representing their qualifications.
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.
In this article, our workplace lawyers explore the concept of misleading and deceptive conduct in employment. We will look at the Fair Work Act, the Australian Consumer Law (ACL) and misrepresentation under Common Law.
Misleading conduct in an employment context occurs when individuals or businesses provide false information or omit important details during the hiring process. This can have serious consequences for both parties involved.
To mislead or deceive someone is to:
In Australia, there are laws that make it unlawful to mislead employees and employers. The relevant laws are:
The ACL, as part of the Competition and Consumer Act 2010, prohibits deceptive conduct during the recruitment process. An employer may face liability if they fail to fulfill promises they’ve made. They can also be held responsible if they misrepresent key details to entice an employee to accept a job offer.
Section 31 of the ACL prohibits engaging in behaviour that may mislead persons in relation to employment. This includes the availability, nature or terms and conditions of that employment.
Misunderstandings often arise when employers make promises before employment, either verbally or in emails. These are often referred to as ‘representations’. Generally, the employment contract outlines these promises, and the employer fulfils them.
For example, an employee may be promised that they will:
However, in certain circumstances, employers may not fulfill them, or the promise is not included in the employment agreement. If these promises or representations aren’t included in the employment contract, they may be unenforceable.
Misleading statements can also apply to statements about the employer’s business, like its profitability or size.
An employee can make a legal claim against their employer if the employer promises certain things to the employee and doesn’t deliver on those promises.
Not every statement or promise made by an employer will be considered a legally binding promise. There are specific types of statements that, while potentially influential, do not typically qualify as legal representations. Understanding what does not qualify as a representation helps both employers and employees manage expectations.
In some cases, employers may use positive, non-specific language intended to create enthusiasm for the role. This type of “puffery” or “sales talk” is common and generally understood not to be legally binding. These statements are often subjective opinions, aspirations, or general descriptions rather than enforceable promises.
For example, general statements about “potential” work culture or vague terms like “opportunities” are unlikely to be considered formal representations.
What matters is whether a reasonable person in the employee’s position would interpret the statement as a guarantee. Statements of opinion can also convey the same idea.
If an employee suffers loss because they relied on a false statement by the employer, 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. Breaches of these sections can result in fines, injunctions or compensation orders.
Employers found to have misled may have to reimburse employee or candidate for legal costs and losses incurred, such as relocation fees and lost wages.
Employees may also be able to make a claim under sections 345 and 349 of the Fair Work Act. These 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 application.
Section 345 of the Fair Work Act states that making false or misleading representations about workplace rights or the exercise of workplace rights is unlawful. For a person to recklessly make a false or misleading representation about the rights of another:
Employers must not make a false or misleading representation about the rights that a worker has or does not have.
Section 349 of the Fair Work Act deals with false statements regarding union or other industrial activities.
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 in order to work at a certain place.
If an employer is found to have engaged in deceptive or misleading conduct under the Fair Work Act, the consequences can be significant. Potential penalties may include fines, compensation orders and injunctions.
The consequences of deceptive conduct also extend beyond financial penalties. They may also damage an employer’s reputation, impact workplace morale, and erode trust between employees and management.
Employees may also be able to make a claim under Common Law legal principles. Common law claims are based on legal concepts established by court decisions, rather than legislation.
Under Common Law, an employee may be able to bring a claim for misrepresentation, breach of contract or negligent misstatement. The employee must be able to prove an employer’s misleading conduct or false promise influenced their decision to accept or remain in a job.
A claim can be difficult to defend it the employer recklessly makes a false representation, it’s a term of the employment agreement and they don’t keep their promise. Employees can be successful in recovering damages for loss suffered as a result of the employer’s misrepresentations.
Let’s take a look at a couple of real-life examples to better understand employer misrepresentation and its consequences under Common Law.
Morton v Interpro Australia Pty Ltd & Anor
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 entered 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 breach of contract. The court ruled that the bonus calculation formula was a part of Morton’s contract and was a legally binding promise.
Moss v Lowe Hunt & Partners
In another case, Moss, an advertising and research consultant, ran his own company. Upon promises made by his employer (LH&P), Moss joined LH&P as an employee. LH&P made promises related to the company’s financial success to entice Moss to join.
When Moss later discovered the actual financial condition of the company, he claimed damages for misrepresentations made by LH&P.
The court found the company guilty of making false and misleading statements, ordering compensation for Moss of approximately $306,000.
O’Neill v Medical Benefits Fund of Australia
In this case, 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 claimed against the employer for misleading and deceptive conduct after his position was made redundant within two years. This case cements that an employer may be responsible for representations made to prospective employees by a recruitment agency.
Charles Tham v Hertz Australia Pty Limited
In this case, Tham was dismissed by Hertz after they discovered that he had falsified information on his resume and in his job application. Tham had misrepresented his qualifications and previous employment experience, leading Hertz to question his honesty and integrity.
Upon discovering these discrepancies, Hertz terminated Tham’s employment. They saw the misrepresentation of his credentials as a breach of trust essential to the employment relationship. Tham subsequently filed for unfair dismissal, arguing that the misrepresentations were not relevant to his ability to perform his role.
The Fair Work Commission upheld Hertz’s decision, finding that lying on a resume constituted valid grounds for dismissal. The FWC concluded that the employment relationship relies on trust and honesty, and that Tham’s misrepresentations were significant enough to justify termination.
Misleading and deceptive conduct in employment includes providing false information or omitting important details that influence an employment decision. This could involve exaggerating job benefits, misstating salary details, or making unrealistic promises about career progression. Both employers and employees can be liable if their actions mislead or deceive the other party.
Yes, if you accepted the job based on a significant misrepresentation from the employer, you may have grounds to file a claim under the Australian Consumer Law or the Fair Work Act. If the misrepresentation influenced your decision to accept the job, you could seek compensation for any resulting losses.
If an employer fails to fulfill a promise made before or at the time of employment, you should first check if the promise is part of your employment contract. If not, but the promise was influential in your decision to join, you may have a claim under misleading and deceptive conduct. Legal advice can help you understand the best course of action.
Yes, employers can be held responsible for representations made by recruiters or third parties acting on their behalf. If a recruiter promises certain job conditions or benefits to a prospective employee, and the employer does not uphold these terms, the employer may be liable under the Australian Consumer Law or common law.
Employee misrepresentation includes providing false information about qualifications, job history, or references during recruitment. If an employer later discovers these inaccuracies, they may have grounds for disciplinary action, which could include dismissal if the misrepresentation significantly affected the hiring decision.
Employers can include an “entire agreement clause” in employment contracts, which specifies that only the terms in the written contract are enforceable. However, an entire agreement clause is not enough to protect an employer. Being clear and accurate during recruitment can reduce the risk of misrepresentation claims.
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