What do you get if you take a splash of personal liability for directors under the model workplace health and safety laws (the catch cry of workplace lawyers Australia-wide in 2012) and mix it with a sprinkle of another favourite legal slogan, “beware of liability under trade practices law for misleading and deceptive representations in employment”?

Section 345 of the Fair Work Act 2009 (FW Act), the poorer and less publicised cousin of these two much-talked-of perils for employers.

Section 345 prohibits a person (such as an individual employee, HR manager, payroll officer, CEO, director or the employing entity itself) “knowingly or recklessly” making a “false or misleading representation” about a person’s “workplace rights” or exercise of those rights. Section 345 is a civil penalty provision with penalties of up to $6600 for individuals and $33,000 for companies per breach.

Employees often place significant reliance on employers for information about their workplace rights and employers make representations about those rights on a daily basis, such as in the terms and conditions of employment or payroll systems. Consequently, the potential for prosecution for reckless misstatement under this section is broad.

Section 345 is much wider and a party does not have to prove loss to establish a contravention based upon the false or reckless misrepresentation. The focus of the section is whether knowing or reckless indifference to the truth of the statement can be made out, by examining the state of mind of the person or entity making the representations.

Inform yourself

The FWO commenced an action in the Federal Magistrate’s Court against the Australian and New Zealand arms of Jetstar alleging that when it engaged trainee pilots to perform roles based in Australia, the Jetstar entities erroneously and recklessly told the employees their employment was governed by New Zealand law. According to the FWO’s media statement the employees were engaged under individual New Zealand-based contracts that allowed the company to require trainees to repay training fees, when that would not have been permitted under the local Australian Air Pilots Award, which the FWO contends applied to the trainee pilots.

If the court finds that the Australian Award would have applied (and therefore they were false representations about trainees’ rights and obligations under employment), media reports state the Ombudsman will allege that Jetstar, and the HR manager, ought to have known, or failed to inform themselves about whether the cadet pilots were covered by Australian laws.

The question of whether a person has taken steps to inform themselves, demonstrating they are not indifferent to whether the statement is true or false, will be highly relevant in most cases brought under this section.

In a case under the former WR Act, Fleming v Restaurant Services Group & Ors [2008] FMCA 45, the manager of a chain restaurant relied on information he had received from the controlling entity, which had prepared the agreements for use in restaurants, about the content of the AWA.

He then asked for that summary to be confirmed in writing and passed this information on to employees. Even though the manager did not look at the AWA himself to compare the information he had received with the written terms and conditions, the Federal Magistrate determined the manager’s conduct in requesting information and relying on it was not the conduct of someone who was reckless as to the truth of his statements.

And did we mention section 362 of the FW Act — which provides that a person who advises, encourages or incites a second person to take action that if taken would be a contravention of the FW Act, is also taken to have breached the act?

What is the moral of the story? Exercise care in the provision of workplace information and move swiftly to correct errors.