In an ever shifting economy, redundancies are often an unfortunate and inevitable part of the employment landscape. This can be particularly hard on employees who have sacrificed a stable and well-paying job only to have their new employment short-lived. However, it is important to recognise that the law protects employees who have been made redundant in certain situations.
Firstly, employees who have been made redundant should ensure that their redundancy is genuine. Further information on determining whether your redundancy is genuine can be found here.
If there is no ability to challenge the redundancy on the basis of genuineness, you may still have legal recourse in circumstances where your employer engaged in misleading and deceptive conduct. This most often occurs in situations where an employee has been induced by way of a misrepresentation to leave their previous employment and has suffered loss or damage in the form of lost income and/or employment prospects.
Section 18 of the Australian Consumer Law generally prohibits conduct, in trade or commerce, that is misleading or deceptive or is likely to mislead or deceive. Section 31 specifically provides that when offering employment, employers must not engage in conduct that is liable to mislead persons seeking the employment. This includes in relation to the availability nature, terms, or conditions of the employment or any other matter relating to the employment. Whilst the above sections encompass a variety of situations, they most pertinently apply when an employer has previously assured a now-redundant employee of secure and long-term employment or the viability of their role.
To establish a breach of the Australian Consumer Law, there must have been a real chance that the employee might be misled or deceived by the employer’s conduct. The test of ‘liable to mislead’ under section 31 is slightly narrower and requires consideration of the knowledge of the parties and nature of their dealings. It is not material whether or not the employer intended to mislead or deceive the employee.
Most actions for contravention of the above sections following redundancy rely on representations made by an employer regarding future matters. This typically includes promises about the longevity of prospective employment and/or the forecasted growth and financial performance of the business. Representations made about future conduct will not be misleading or deceptive merely because they did not come to pass. For example, in the case of Patrick v Steel Mains Pty Ltd, the employer promised to continue employing staff at a new plant with the intention of continuing operations. The employees relocated to this plant but it was later closed after business declined. This representation was not found to be misleading or deceptive as the employer intended and had reasonable grounds to believe that it would honour its promise at the time of making it.
For representations regarding future matters to be considered misleading or deceptive, it must be established that:
Where such misleading or deceptive representations are made by an employer to an employee who relies upon such representation to their detriment, damages may be awarded for loss suffered under section 236 of Australian Consumer Law. This requires that the misleading or deceptive representation materially contributed to the employee’s loss, but does not need to be the sole cause of loss. That is, the fact that an employee was induced to forego previous employment for reasons including promises of ongoing and secure employment amongst others is sufficient to establish liability on the part of the employer where such representations are misleading or deceptive.
Further, contravention of section 31 of the Australian Consumer Law may also constitute an offence of strict liability, exposing employers to a penalty of up to $1,100,000.