Maurice Blackburn

Misleading and deceptive conduct - Competition and Consumer Act 2010 (Cth)

Our employment lawyers regularly provide advice to clients about their rights under the Competition and Consumer Act 2010 (Cth) and their entitlement to bring a claim against their employer for misleading and deceptive conduct.

The Competition and Consumer Act 2010 came into effect on 1 January 2011 and replaces the Trade Practices Act 1974 (Cth). The Act contains a number of provisions which aim to protect consumers and promote fairer corporate trading and competition.

It also provides protection for prospective employees against misleading and deceptive conduct.

Misleading and deceptive conduct

Section 18 of the Competition and Consumer Act 2010 prohibits conduct that is misleading or deceptive, or is likely to mislead or deceive. 

The misleading and deceptive conduct provisions make it unlawful for a prospective employer or recruitment agent to make false or misleading representations to a prospective employee about the:

• availability, nature or terms and conditions of employment, or any other matter relating to the employment
• company's financial status, including profitability and risk, or other material aspect of any business activity of the company that proposes to engage the prospective employee.

These provisions are particularly relevant in today's competitive labour market where employers provide incentives to attract the best employees, but may not always honour their promises. 

They can also relate to circumstances where an employer recruits an employee with assurances regarding the financial status and viability of the business, which may then turn out to be untrue.

Cases where employees have made a claim under the misleading and deceptive conduct provisions include Morton v Interpro Australia and Moss v Lowe Hunt & Partners.

In the case of Morton v Interpro Australia Pty Ltd & Anor [2009] FMCA 423, a senior sales employee argued that representations by his then prospective employer about a bonus structure that was then cancelled amounted to misleading conduct.

The court held that in circumstances where an employer tells a prospective employee that they will receive a particular pay outcome, but then they do not provide the payment and remove the scheme altogether, the conduct is deemed to be misleading and deceptive.

In Moss v Lowe Hunt & Partners [2010] FC 1181, Moss was an advertising and research consultant who ran his own company. During his time as an advertising consultant, he completed work for advertising agency Lowe Hunt & Partners (Lowe Hunt).

Lowe Hunt then pursued Moss and sought to employ him on a full time basis. During the period while Lowe Hunt were in negotiations with Moss, Lowe Hunt made several representations to Moss which included representations:

• that Lowe Hunt were a financially successful agency
• that Lowe Hunt was a business in a great position and likely to be financially successful in the future
• about recent redundancies within the company, where they stated that the redundancies would place Lowe Hunt in a very healthy position, and improve the company's balance sheet.

Moss became an employee of Lowe Hunt after relying on these statements, but within 18 months his role was made redundant.

The Federal court found Lowe Hunt's representations to be false and misleading. The Judge stated it was misleading or deceptive to describe a business as being successful when it did not have the continued support of its parent company.

Employees who have been misled and deceived about their terms and conditions of employment, their earnings or their career progress, may have a claim against their employers. For further information, contact our Employment and Industrial Law team on 1800 810 856.