Employees Beware - Liability For Misleading Conduct At Work - You´re Not Covered By Your Employer

Every employee beware…

Employers beware too...

Today, the High Court held that employees are liable under State fair trading legislation that prohibits a 'person' from engaging in misleading and deceptive conduct.

Employees who think they are immune from liability (because employers are liable for the acts of an employee) are incorrect. This decision paves the way for employees to be personally liable if they are involved in misleading and deceptive conduct of the employer.

The main concern for employees is that it does not matter if the employee knew that the conduct was misleading or deceptive. That is, the employee's understanding is irrelevant. If the employee engaged in the conduct during their employment, then they can be personally liable.

In the case before the High Court, the plaintiff, Mr Arms, sought advice from one of the defendants, WSA Online Limited. WSA engaged in misleading and deceptive conduct. That company went into liquidation. The plaintiff also sued the employees who were involved in the misleading conduct.

The High Court had to determine whether the employees (in their capacity only as employees) could be liable under State legislation that prohibits a 'person', in trade or commerce, engaging in misleading and deceptive conduct.

The answer is… yes, employees can be liable.

So employees beware…your assets are at risk!

Employers beware… if your employees are liable for misleading and deceptive conduct engaged in the course of their employment, the employee may take action against you subject to the principles of vicarious liability and in some parts of Australia, employee indemnity legislation.
By Nathan Mattock

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.