Legal insight: Breach of contracts
04/02/2010
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5
comments
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
Latest Comments
Total:
5
comment(s)
Simon on
04 Feb 2010 03:34 PM
The unsaid here in the answer is that your company deserves to be sued if your position is "am i liable?". You are 100% morally liable - the person has uprooted their whole life for this role in a reasonable tough economic environment. How would you feel? The tone of your question makes me question whether you should be in charge of employing anybody, period.
Jan becker on
04 Feb 2010 03:42 PM
I have come to the conclusion you must not work in HR. Any reasonable person would realise the consequences of making an offer, then withdrawing it. Especially interstate. You do deserve to compensate this person for their personal and professional loss, all round.
Kate on
04 Feb 2010 10:52 PM
Although I agree that it is not good HR practice, when you work for a big organisation, sometimes ignorant managers do dumb and unethical things that you have to deal with. Bronwyn, thanks for addressing a question that is 'out of the box' and will no doubt prove useful at some stage in my career.
Kate Sumner on
21 Apr 2010 06:06 PM
Hi there,
Please can you advise whether or not this applies to my stuation.
I was unemployed when I was offered a role in Adelaide, but living in Melbourne. I had to apply for a visa to work there, but had received a signed contract offering at least 2 years employment.
I travelled to Adelaide at my own expense and partook in 3 days training with the company (unpaid).
I paid almost $6k in visa costs for this offer of a permanent role, and travelled agan to Adelaide to find a home.
There were issues with the visa application whereby the Board were not satisfied with the salary offered and the advertising of the role. My erstwhile manager said he would fully support me still, the company still wanted to employ me and we would gather evidence regarding the salary, readvertise for a further month and reapply.
In the meantime I had other offers of employment whhich I turned down due to this offer.
I had to return to the UK while I waited for the employer to resubmit information to Immigration. I was then notified that there were selling the shop where I was due to be employed, and there was no longer a position for me.
I assume that they would not have known about this when they originally offered me the role, however they are now arguing that the withdrael of the job offer is due to the visa issues encountered, and not due to the selling of the store.
I have lost a lot on money and other opportunities die to this situationand am now stuck in the UK when all my possessions (and cat) remainin Melbourne.
Do I have a case for a breach of the Trade Practices Act?
Many thanks.
Sonja on
28 Nov 2010 04:34 PM
Hi, I worked for a large media company for 12 years. I left the Company due to bullying. The person has since left. When he left, a Senior Manager at the Company contacted me to ask me whether I would be interested in the role. It paid 200k+. I said, "Yes". This person then called to say it had been approved by the CEO. I then received an email from this person asking me to "name my price and list any concerns I might have". I replied with my concerns - I was still considering my salary. In the meantime, I received a call from another Senior Manager to say that he was pleased I was coming on board. He also asked me to name my salary. Within a week the offer was withdrawn thru a phone call by the second senior manager saying, "they had decided on taking an alternate route". I was incredibly disappointed as I had a proven track record with this company. I believe it was withdrawn because it came to their notice that I had put in a complaint about the previous manager (whose role I was to take over). I then emailed the second manager and asked for feedback about why I had been overlooked. The position was advertised on Seek in early September for 200k salary. I received no response to my email asking for feedback. I still have the emails. Am I in a position to sue? Particularly, since they approached me.
Thank you