So you have been offered a job by a new employer and you give notice to your existing employer of your resignation. All is looking bright until you get an email from your new employer advising that the offer is no longer open and thanking you for your interest. Apart from the automatic “What the…” response, what can you do, apart from go cap in hand to your existing employer asking to stay on. The short version is usually, not much.
Traditionally, there is a difference between the employment contract and the employment relationship. The start point is that the employer can terminate the employment contract by paying the notice provided in the contract, usually 1 or more weeks pay, and there is no breach of contract (and damages are usually limited to the specified notice anyway). Unlike the contract, the employment relationship does not usually commence until work commences. Whilst an employment contract may be in place, the employment relationship may not have commenced.
The performance of work and payment of wages are the usual indicators that an employment relationship has commenced. However, a recent decision of the Fair Work Commission (FWC) highlights that employment may exist even before the employee starts work and starts getting paid. In Mrs Sonia Argentier v City Perfume Retail Pty Ltd [2023] FWC 1819 (24 July 2023) the FWC said that all of the surrounding circumstances should be taken into account. There, it was considered that an employment relationship had been created where:
• the contract stated that it was intended to create an employment relationship;
• the contract restricted the new employee’s capacity to work for another employer once signed;
• on boarding information had been provided;
• the employee’s attendance had been confirmed for a training session; and
• shifts had been allocated to the new employee.
The position is obviously more difficult where the contract has not been finalised or substantive steps towards starting work have not been taken. This also does not mean that you can challenge the unfairness of the decision because the required minimum employment period under the Fair Work Act will not be met (6 months/12 months). So contract law and unfair dismissal law are not much help. Does the lack of a contract make a difference though? What are the legal options?
The general protections provisions of the Fair Work Act usually offer the best bet for legal action. A termination based claim can be made where, like the facts in Argentier, the commencement of an employment relationship can be established. However, the general protections provisions will also apply where a prospective employer takes any adverse action against a prospective employee because of one of their legislated workplace rights. In Argentier, it was alleged the employment had been terminated because the employee made an enquiry about being paid for attending pre commencement training. The benefit of establishing employment in a general protections claim is that a compulsory conference will be held in the FWC to try and resolve the matter. Otherwise, it will usually be necessary to commence a claim in the Federal Circuit Court unless the other side agrees to a conference before the FWC. But the onus is on the employer in these types of claims to disprove that adverse action was taken for the prohibited reason.
Taking adverse action for a discriminatory reason can also form the basis for a general protections claim. Or a claim can be made under discrimination legislation in the pre employment area on grounds such as age, race, disability, family or carer’s responsibilities and pregnancy. This is not an exhaustive list. A discrimination complaint will usually involve a conference in the state or federal Human Rights Commissions before proceeding to a judicial type process.
There is also an avenue available under the Australian Consumer Law. There is a general prohibition on engaging in misleading and deceptive conduct in trade or commerce. However, there is a specific provision (section 31) specifically directed at pre employment offers. This provides that prospective employers must not engage in conduct that is liable to mislead people seeking employment. So you may be able to take action if you have resigned from employment based on representations made by the new employer. However, the misrepresentation needs to be clear and preferably in writing. And be warned – these are not easy legal actions to bring.
It is also one thing to have a basis for a claim but, once you have got over the shock, you will need to consider whether your likely loss justifies the taking of legal action. In many instances, compensation for economic loss will be limited by the need to look into the “crystal ball” – courts are often conservative and it may be difficult to assess how long the new employment might have lasted given it didn’t even start. It is also important to be aware of time limitations in commencing legal action and legal advice should be sought as soon as possible.
Practically:
• you should never resign from your existing job without at least signing a contract with your new employer and getting a firm start date;
• do prior research on the employer – usually you can pick something up on the internet if they are involved in questionable employment practices;
• don’t rely on assurances made by a recruiter and again, do some research on the internet to see if the recruiter is reputable. Sometimes the recruiter will not be given the full picture by their client, the employer;
• get everything in writing;
• if all else fails, have an honest discussion with your old employer – it may be possible to withdraw your resignation.
Please contact us if you would like any further information or help.