The employment dating game: how to avoid the legal pitfalls

There are a number of ways for avoiding unexpected surprises in employment relationships and for dealing with them if they arise

Finding the right employee can be a bit like dating. Gordon Williams discusses the challenges that can arise in the seemingly most solid employment relationships

This is the first of two articles focusing on particular challenges in the employment relationship at two key points in time – the very beginning (aka the “chat up” stage) and the end (the “break up” stage, which I’ll address in the next issue).

I think the relationship analogy is quite apt. If you think about it, employment could be much like any other relationship:

  • you want someone to fill a particular role
  • your ad creates some interest, so you arrange to meet for an initial chat
  • that chat goes well and you arrange to meet up again
  • after a few more meetings you’re convinced you’ve found the one, and you take a big step and commit
  • while we all hope the reality lives up to the dream, unfortunately, it doesn’t always turn out that way.

Here are a few suggestions for avoiding unexpected surprises in employment relationships and for dealing with them if they arise.

Be careful what you say in those early meetings. For example, don’t oversell the role. The main problem areas are usually around remuneration, promotion or job security.

“While it’s good to be optimistic, you also need to plan for the worst”

And what’s said at the recruitment stage often has a nasty habit of coming back to bite when things are not going so well – and could lead to a legal claim (for breach of contract or based on misleading and deceptive conduct).

For example, in Robertson v Knott Investments Pty Ltd [2010] FMCA 142, Mr Robertson (65 at the time) wanted employment for a three- to five-year term. Knott did not agree to this, but said “we want you here for the long term until you retire”. Unfortunately, Mr Robertson was made redundant after 15 months. He made a misleading and deceptive conduct claim. 

However, the Court found:

  • Mr Robertson had not relied on the representation – he wanted the job regardless; and
  • Knott’s representation was reasonable at the time it was made – the GFC (which ultimately led to the redundancy) could not have been foreseen.

You can minimise these risks by including an entire agreement clause in your employment contracts – something that says the contract deals with all relevant matters and excludes any prior representations.

You also have to be careful about the touchy subjects – those questions that could be interpreted as discriminatory; for example, “Do you plan to get married? Do you have kids? How old are you? Sometimes these questions can be hard to avoid when the conversation is going well. But if the candidate is ultimately unsuccessful, they might look for a reason based on their answers to some of those personal questions.

Another question you may need to ask is whether your chosen one really is free to commit – or are they subject to post-employment restraints from their previous relationship? At the very least, they are likely to have continuing confidentiality obligations. If your company misuses that information, it could be sued for inducing a breach of contract. In some cases, this may mean you have to vary the employee’s initial duties or quarantine them from particular clients or parts of your business for a period of time.

Your employment contract can also help you here. For senior or other key roles, it’s worth including a warranty that the employee is free to start working for you without any restriction. It may prompt a disclosure by the employee – or if not, it gives you options if the employee is sued later on by their ex-employer.

“You also have to be careful about the touchy subjects – those questions that could be interpreted as discriminatory”

Your due diligence is also critical. Increasingly, employers are reluctant to give references, so you need to be more imaginative – seek information from performance reviews or climate surveys (being careful about confidential information, of course), look at publicly available information, or where the prospective employee nominates personal referees, think about who else you might also want to speak to.

But keep in mind that information you collect about a candidate is subject to the Privacy Act 1988. The employee records exemption does not apply to candidates (only current or former employees), so they can access all the information you hold. 

If you’ve got this far and it’s still looking good, my final piece of advice is to seal the deal with a good employment contract. While it’s good to be optimistic, you also need to plan for the worst and, among other things, include clauses dealing with the right notice period; the impact of termination on any bonus/incentive schemes; and enforceable post-employment restraints. 

5 key points for HR
Finding the right employee can be a bit like dating. You need to:

  1. avoid overselling the role
  2. avoid the touchy subjects in those early conversations
  3. check the employee is free to commit
  4. do your due diligence
  5. seal the deal with a good employment contract

In the next edition of Inside HR, I’ll look at how to best protect the company when the honeymoon is over and you’re at the painful “break up” stage.