An insurance construction company has been ordered to pay a former employee more than $300,000 after a court found it misrepresented the amount of money she was likely to receive from having a stake in the business.
Svetlana Rakic, a former general manager at Johns Lyng Insurance Building Solutions, was offered a base salary around $100,000 less than her previous employer when originally approached by the company.
However, Rakic was told she would receive a 2.5% share in the business’s profits – leading her to believe she wouldn’t be any worse off financially when taking on the new role.
While Johns Lyng did make a profit in 2013, it was less than what was conveyed to Rakic during the recruitment process.
Rakic took the matter to The Federal Court, arguing the company engaged in misleading and deceptive conduct under Australian Consumer Law because it did not tell her its revenue for the 2012-13 financial year was likely to be millions of dollars less than originally forecasted.
The court ruled in the former general manager’s favour in regards to her compensable loss claim, awarding her $333,422.
The Federal Court also awarded Rakic $16,529 due to the net profit clause in her contract.
Rakic’s lawyer, McDonald Murholme senior associate Trent Hancock, told SmartCompany the penalty in this case is very significant and shows the importance of providing accurate information during the recruitment process.
“Primarily, employers should make sure the information given to employees during the recruitment process is accurate,” Hancock says.
“There’s always potential for there to be temptation for an employer to embellish the success of its business to entice prospective employees across … but employees need to be careful that information does not breach Australian Consumer Law.”
SmartCompany contacted Johns Lyng Insurance Building Solutions for comment, but did not receive a response prior to publication.
SmartCompany also contacted Rakic through her lawyers, but she declined to comment.