Employers and recruiters should be aware of potential liability for misleading and/or deceptive representations made during the recruitment process.
Employers and recruiters should be aware of potential liability for representations made during the recruitment process.
Employers intent on winning over that candidate for a role regularly unwittingly expose themselves to litigation arising from misleading and deceptive conduct.
Why you shouldn't do it
Put simply, it is unlawful. Conduct in the specific course of recruitment which is likely to mislead or deceive is prohibited by the Australian Consumer Law (ACL). It is punishable by penalties of up to $1.1 million for a body corporate and $220,000 for an individual.
Reputational issues to one side, the value of those penalties alone provides a whole lot of reasons for employers not to make misleading or deceptive statements or representations in the course of recruitment. But knowing why you shouldn't do it is different to knowing what you shouldn't do. As such, it is important to know what one can't mislead a job applicant about.
What not to do
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;
- The terms and conditions of the employment; or
- Any other matter relating to the employment.
That last point makes for a very broad array of situations which, in the course of recruitment, can land an employer or recruiter in legal hot water. Some of the more common things which employers find themselves in strife around are:
- Representations about the duration of a contract or role
Often an employee will understand from a recruitment process that there will be role for them until they are due to retire – but what about the prospect of a restructure or a redundancy?
- Statements about future remuneration
Often an employer will make representations about the value of bonuses to be paid and this can be risky, especially where bonuses are ultimately linked to relatively unpredictable factors such as profitability or share price.
- Statements about the financial standing or viability of the employer
An employer bordering on insolvency should not make a representation to a prospective employer to the contrary.
How to avoid liability
The most obvious way to avoid liability is to not make misleading statements or representations which infringe the provisions of Section 31 of the ACL (see "What not to do"). If you're not the only person in your business responsible for recruitment, you should be ensuring that that relevant others understand what not to do and the risks that exist if the line is crossed.
In addition, employers should ensure that their employment contracts are carefully drafted to clearly provide that the agreement supersedes all prior agreements and negotiations and that the employee acknowledges that they have not relied upon any representations made about the employment.
If you or your business needs help:
- in further understanding the risks in relation to misleading and deceptive conduct in recruitment;
- in training employees in relation to the relevant risks; and/or
- ensuring that employment contracts are adequately drafted to counter the risks;
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.
