Haros v Linfox  FCA 699 (22 June 2011)
The Federal Court of Australia recently dismissed a case brought by a former business manager against Linfox Australia Pty Limited ('Linfox') alleging he was misled during the recruitment process about the longevity and nature of his role.
In rejecting the claims against Linfox for misleading and deceptive conduct, Justice Tracey relied heavily on the contract of employment agreed by the parties.
Mr Haros, was engaged as the Business Manager of Avalon Airport from November 2008. In March 2009 he was terminated by Linfox for the stated reason of redundancy (although in the course of proceedings Linfox admitted terminating his employment for unsatisfactory performance, but thought redundancy was an easier way to end his employment). Mr Haros complained that Linfox and its former general manager at Avalon had, in the course of negotiating his contract of employment, contravened the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1999 (Vic) by engaging in conduct which was misleading or deceptive or likely to be misleading or deceptive, or was liable to mislead Mr Haros about aspects of his employment with Linfox.
His complaint related to what he believed was said to him in the period between late June 2008 when he commenced discussions with an agency, engaged by Linfox to find a commercial manager for Avalon, and 29 September 2008 when, contractual terms were agreed with Linfox.
Mr Haros maintained that during pre-employment negotiations, Linfox made misleading representations to him that:
- His employment would be for at least approximately three years
- He would be the sole manager responsible for commercial operations at Avalon (by omitting to inform him that other employees were engaged in such activities)
- Once he gained experience in the Linfox business he would progress to the general manager role.
Justice Tracey, however, found that none of the alleged misrepresentations had been made out.
'There was nothing in the language employed which could reasonably have been interpreted as an assurance or a representation that Linfox wanted to employ Mr Haros as a Business Manager at Avalon 'for at least approximately three years.'' – (para 78).
Further Justice Tracey noted that at the time of recruitment it was the general manager's intention that Mr Haros would 'in time' progress to the general manager level; the time was left unspecified and the general manager also qualified his statement by emphasising that it would first be necessary for Mr Haros to acquire experience in the business.
Justice Tracey also noted inconsistencies between the alleged security representation and the contract of employment agreed between the parties. The contract did not contain a three year or other minimum term but, instead, provided a probationary period of three months during which Mr Haros could be terminated without notice and following probation termination could occur by three months' notice or payment in lieu thereof.
During the recruitment process Linfox neglected to advice Mr Haros that other employees worked on commercial work at the Avalon site. In his claim Mr Haros contended that by failing to mention that commercial work was being performed at Avalon, Linfox implied that no-one other than the general manager was employed to perform such work. Justice Tracey rejected this noting that Mr Haros had not asked any questions which might reasonably have been expected to elicit such information during the recruitment process and it could not be reasonably expected that the general manager was the only one undertaking commercial work at a busy and developing airport.
Justice Tracey found:
'Mr Haros was attracted to the position. He applied for it. He did not seek, nor was he granted, employment for a fixed term. He was offered the business manager's position and accepted it. He did so on mutually acceptable terms and conditions which had been freely negotiated. He laboured under no disabilities during the negotiations...The contract provided, at Mr Haros' request, that, after the probation period had expired, Linfox could terminate the contract on three months' notice or by making a payment in lieu thereof. Statements attributed to Mr Anderson, Mr Fox and Ms Rekas about future prospects for advancement within the company must be understood in this context. Even if one of Linfox's representatives had told Mr Haros that the company wished him to perform the business manager's functions for three years, such a statement would have had to be understood in the light of this legal reality. The contract also contemplated the possibility of the position becoming redundant and prescribed what was to occur in that event. Mr Haros was not misled about the term for which he would be employed.'
What does this decision mean for employers?
This decision highlights some important points for employers to defeat misleading and deceptive conduct claims.
- The importance of the contract of employment. Justice Tracey's decision demonstrates the importance of the contract of employment in setting out the agreed legal obligations of employers and employees. Even if during the recruitment process an employer or recruitment agent makes anticipatory statements about future prospects or the likely advancement of an employee, Justice Tracey's ruling indicates that any such statements would need to be examined with regard to the contract of employment agreed at the time. This decision indicates having a well drafted contract of employment is likely to overcome any contrary claims by an employee that they were misled when accepting a role with the employer.
- Using the right language during recruitment. This ruling also illustrates the importance of utilising appropriate language in the recruitment process (such as 'potential' and 'opportunities') when discussing roles with potential employees. To avoid claims of deceptive and misleading conduct during recruitment the language used should highlight possibilities rather than promises or assurances that may not become reality.
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.