What to Do When Your Job Fails to Deliver on Promises

By Alan J. McDonald

If you take precautions and still find yourself trapped in a workplace which does not live up to the promises made to induce you into the job, what can you do?

Both the Fair Work Act 2009 (Cth) and the Australian Consumer Law (ACL) under the Competition and Consumer Act 2010 (Cth) provide essential remedies when an employer fails to fulfill promises made to entice an individual into accepting a job, in such circumstances where you may have been headhunted from a previous position. These laws are designed to protect employees from misleading or deceptive conduct, breaches of employment terms, and unfair practices.

At McDonald Murholme, we have a proven track record of successfully prosecuting cases under the Fair Work Act and the Australian Consumer Law, achieving favourable outcomes for our clients through strategic legal action. One notable case is Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430.

Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430

In this case, Ms Rakic was employed by Johns Lyng as General Manager from April 2013 to February 2014. During negotiations for her employment at Johns Lyng, Ms Rakic alleges that the company made misleading representations regarding its profitability, which influenced her decision to leave her position at Pattersons Insurerbuild Pty Ltd (Pattersons) and accept the role at Johns Lyng. Ms Rakic’s remuneration included a percentage of net profit, making the representations about profitability particularly significant.

Ms Rakic brought forth three main claims against Johns Lyng. The first was an ACL Claim, alleging misleading or deceptive conduct under the Australian Consumer Law (ACL). She sought compensation for the losses incurred due to her reliance on these representations, where she contended that had she not relied on these statements, she would have remained at Pattersons or secured a similarly or more lucrative position elsewhere.

The second claim was a Debt Claim, in which she claimed entitlement to 2.5% of the net profit of Insurance Building Solutions (Victoria) Pty Ltd for the 2012/13 financial year as it states she is entitled to that amount in a clause in her contract of employment. Johns Lyng contended that she was only entitled to the profit earned during her employment, which was a loss.

The final issue, referred to as the Lease Issue, involved a dispute over lease payments made by Johns Lyng for a vehicle Ms Rakic was using. She argued that an oral term of her employment contract included the assumption of responsibility for these payments.

The Federal Court of Australia’s decision

The court found that Ms Rakic had successfully established her claim under the Australian Consumer Law (ACL), determining that the representations made by Johns Lyng regarding its profitability were misleading or deceptive. The court noted that Ms Rakic heavily relied on these representations when deciding to leave her stable position at Pattersons Insurerbuild Pty Ltd.

Evidence indicated that had she not received these assurances about profitability, she would have either remained in her previous job or sought alternative employment under more favourable conditions. As a result, the court concluded that Ms Rakic suffered a significant loss due to her reliance on these representations, amounting to $333,422 in compensable damages.

This figure reflected the financial detriment she experienced from her employment decision, which was ultimately based on the misleading information provided by Johns Lyng.

Regarding the Debt Claim, the court examined the terms of Ms Rakic’s employment contract, specifically the clause stipulating her entitlement to 2.5% of the net profit of Insurance Building Solutions (Victoria) Pty Ltd. The court ruled in Ms Rakic’s favour, affirming her entitlement to this percentage based on the financial results for the relevant period.

Despite Johns Lyng’s argument that Ms Rakic could only claim profits earned during her tenure when the company incurred losses, the court held that the clause did not limit her entitlement in that manner. Instead, it determined that Johns Lyng owed Ms Rakic $16,529 for the profits accrued during the 2012/13 financial year, acknowledging her contributions and the contractual obligations of the employer.

Please do not hesitate to contact our firm on 03 9650 4555 to speak with one of our experienced employment law solicitors. We are here to provide you with expert guidance on your options if you find yourself in a workplace that does not fulfill the promises made during your recruitment.