Q
This is the situation. I've offered a job to someone who lives interstate. They have accepted the job, signed the contract, and have resigned from their previous job and have moved to Sydney - which they have paid for themselves. However, due to internal restructuring, before that person starts, I've had to retract that job offer. Can they sue me for losses incurred by my breach of contract?
A
Withdrawal of a job offer can, in some circumstances, enable a person to sue. In one case (Walker v Citigroup Global Markets Australia Pty Limited [2006] FCAFC 101), an individual (Walker) was awarded over $2.3M in compensation in connection with the withdrawal of an offer of employment. The case serves as a strong warning to employers.
In relation to your situation, a key question will be: what representations were made to the person in relation to the role?
Claims can be made under the Trade Practices Act for misleading conduct during recruitment. If, when the offer was made, your company knew the restructure was pending, the representation that the role was available may be misleading. Courts, in that circumstance, can assess compensation by multiplying the remuneration the person would have received had they continued in their previous employment, by the number of years the court considers that employment may otherwise have continued (eg: 2 to 5 years).
In relation to the costs of the move to Sydney, if that was a lifestyle choice, you may not be liable. However, if the reason for the move was solely because of your job offer, then you could be ordered to cover the cost.
You could also face a breach of contract claim (either combined with or separate from a trade practices claim). Your exposure to such a claim may depend on whether you had guaranteed a minimum employment period. Say, for example, in the negotiations you guaranteed a minimum 12 month employment period, then the court may award damages equivalent to 12 months' pay.
In light of the above, it may be worthwhile for you to audit what representations have been made to the person, so you can assess your potential exposure to any legal claim.
About the author
Bronwyn Maynard is senior associate & team leader at Harmers Workplace Lawyers. For more information call her on (02) 9267 4322 or visit www.harmers.com.au