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I never promised you a rose garden
It seems that there exists a world that I have never experienced. It is a place where sticks of chewing gum magically slide from their wrappers, where car parks immediately outside trendy restaurants become miraculously available just when required, and where fast food restaurants produce food which appears, well, inviting.
This imaginary world is, of course, a creation of advertising. In other words, it is someone's job to make things look as good as they possibly can be - even where that means making them look a bit better than they really are.
Whilst advertising can happily exist within the bounds of the law, there are limitations upon this creative world of construction. An over exaggeration about a product may amount to false advertising - which can result in legal consequences.
The position is similar in employment law. When an employer seeks to attract applicants to a new job it will, of course, seek to paint the position in the most attractive light possible. The employer must not, however, overstep the mark and exaggerate or misrepresent the true situation. If it does, it may suffer the consequences.
This issue was recently considered by the Industrial Relations Commission of New South Wales in Michael Thomes v Keycorp Limited [2003] NSWIRComm 459.
The employer in that case was an IT company which, in June 1999, sought to recruit an experienced executive to assist it in its next "phase of growth". The judgment records that a recruitment agent hired for the purpose of attracting applicants described the company as "like an unpolished gem that needs to be polished".
Mr Thomes was, at this time, an executive with another IT company. The recruitment agent sought him out and approached him directly. Thomes expressed a general interest in considering the position with Keycorp, and entered into discussions with the recruitment agent.
In essence, Thomes was presented with representations and information which tended to suggest that Keycorp was in a generally favourable financial position, and that it was successfully developing products for market. Thomes understood that the offer of employment was intended to allow for him to advise on and implement efficient processes and procedures to support global expansion.
Ultimately, Thomes accepted a position with Keycorp on a salary of $400,000, together with an incentive bonus of up to a further $400,000.
When Thomes commenced his employment, however, he found that the company was in a different position to that which had been represented. There were problems with some of the company's products. Further, it was challenged by financial problems of such magnitude that in order to survive it had to identify a strong solvent business partner (or, in the alternative, retrench some of its operations).
When Thomes realised the true state of affairs, he complained both to the company and to the recruitment agent. He said that he had been induced to take up his employment because of misrepresentations made to him. He was, however, in an unenviable position - he had only just given up his previous employment and could not leave his job with Keycorp without the prospect of seriously damaging his career. The Commission found that he had no alternative but to remain with Keycorp and to make the best of a bad situation.
Unfortunately, the company's fortunes did not improve over the succeeding months and Thomes resigned in August 2001.
Following his resignation, Thomes made a claim against the company in respect of what he said were the misrepresentations made to him. His claim was brought under Australian legislation which gave the Commission power to vary his employment contract.
In the event, the Commission found in Thomes' favour, holding that a number of misrepresentations had been made to him prior to his employment. It ordered his contract be varied by the inclusion of a term requiring the employer to make him a payment of 18 months' salary at termination, together with incentive payments which ought to have been made during the term of the employment itself. The sum ordered to be paid to Thomes exceeded $1.5 million.
Under New Zealand law, Thomes' situation would be approached slightly differently - although in substance he would claim on the same basis.
First, the provisions of the Employment Relations Act (relating to the obligation of good faith) would not apply in respect of pre-contractual representations. Instead, a claim would most probably be made under the Contractual Remedies Act. That legislation allows an employee who has been induced to enter into an employment contract by misrepresentation to seek damages. Those damages are assessed against a contractual measure - which means the employee would be entitled to seek payment of the amounts that he or she would reasonably have expected to receive had the representations been true. This measure differs slightly from that allowed by the Commissioner in Thomes' case, in that it would not allow for the amendment of the contract to impose a term requiring a payment of certain amount at termination.
Secondly, another distinction would probably be the time take to achieve an outcome under New Zealand law. The decision of the Commissioner was delivered over two years after Thomes resigned from his employment - and occupies over 50 pages of text. Under New Zealand law, in the first instance, Thomes and his employer would be required to attend mediation (probably within a number of weeks following resignation) - and, failing resolution, it might reasonably be expected that a decision of the Employment Relations Authority would issue within six months. From the employee's perspective, this comparative time efficiency would undoubtedly be seen as an advantage of New Zealand's law.
This decision represents a sound warning to those who may be inclined to over exaggerate in advertising for applicants. While it is acceptable to paint a job in the most attractive light possible, a misrepresentation of circumstances may lead to negative consequences for an employer.
