When your recruitment agency gets the numbers wrong, who pays the price
A recruitment agency's math error landed KiwiRail in court, but a watertight employment contract saved the company in a January 23, 2026 decision.
Mitchell Perry saw exactly what he wanted in a job posting: cabin attendant work on New Zealand's Interislander ferry service paying $27.80 per hour. The advertisement spelled out six-day rosters with 10-hour shifts, followed by three days off. Perry applied, got hired, and started work on October 21, 2022.
Then reality hit. The actual pay worked out to roughly $23.80 per hour, about 14 percent less than advertised.
Madison Recruitment Limited, the agency KiwiRail used to fill the position, had bungled the calculation. The recruiter divided the $57,828 annual salary over a standard 40-hour week across 52 weeks, ignoring the actual 60-hour roster cycle that applied to the role.
By December 15, 2022, KiwiRail sent Perry a letter explaining the mistake. The company told him Madison had wrongly advertised an hourly rate instead of the annual salary. Perry resigned three weeks later on January 4, 2023, then demanded compensation for what he claimed was underpayment.
Perry told KiwiRail he never would have applied at the lower rate. His subsequent legal claim tested whether employers can escape liability when recruitment advertising misleads candidates, even unintentionally.
His lawyers threw everything at the case: misrepresentation claims, misleading conduct arguments, breach of contract, unjustified disadvantage, unfair bargaining, and eventually constructive dismissal. The case wound through preliminary jurisdictional fights before reaching a full hearing at the Employment Relations Authority.
Authority member Rowan Anderson delivered a ruling that favored the employer, but the reasoning matters more than the outcome.
The decision turned on what Perry knew and when he knew it. The written employment offer dated October 10, 2022, which Perry signed a week later on October 17, 2022, clearly stated his annual salary of $57,828. The offer referenced the collective agreement governing his employment and spelled out the roster he would work.
Anderson found that "while the advertisement contained an hourly rate that was incorrect, the information provided to Mr Perry prior to accepting employment was correct." The determination emphasized that "I find that any reliance on the advertised hourly rate could only have remained until the offer of employment was made based on a specified salary."
The Authority established that KiwiRail bore full responsibility for Madison's error since recruitment agencies acting on behalf of employers create direct liability. But responsibility for the mistake did not equal financial damages, because Perry received exactly the salary promised in his signed contract.
Perry also got additional payments for late sailings at time and a half, calculated from the collective agreement rates. He suffered no actual financial loss, even though his expectations about the hourly breakdown proved wrong.
All claims failed. The constructive dismissal argument died on a technicality since Perry never filed it as a formal personal grievance within the required 90-day window.
The practical lessons cut straight to the heart of recruitment practice. Recruitment agencies working on your behalf put your organization on the hook for their mistakes, making close oversight non-negotiable. Employment contracts with crystal-clear terms remain your strongest shield against claims stemming from recruitment errors. And while KiwiRail won this fight, the case shows how advertising mistakes, innocent or not, poison the employment relationship and spark disputes that careful vetting could prevent.
