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Skeletons in the Closet – Misrepresenting Convictions

Written by Jim Roberts on November 8th, 2013.

A Fonterra driver has won his unjustified dismissal case after failing to disclose previous criminal convictions in his job application. The application included a warning that a failure to disclose could be grounds for dismissal.  The Employment Relations Authority awarded the employee a total of $18,000. 
 
Facts
 
The driver, Mr Richardson, wrongly thought that his convictions were covered by the Criminal Records (Clean Slate) Act 2004 (Clean Slate Act). 
 
Mr Richardson had convictions for driving with excess breath alcohol, driving while disqualified and theft as a servant.  He had been imprisoned. 
 
Mr Richardson answered very clear questions in the application form by stating that he had no convictions.  The form advised Mr Richardson to visit the Justice Department website for further information if he was unsure.  It also advised him that providing misleading or false information may be grounds for dismissal.  Mr Richardson understood that the Clean Slate Act applied to him.  He also completed a consent for a police check, known as a Criminal Convictions Record (CCR). 
 
Approximately one month after Mr Richardson had commenced employment, Fonterra received his CCR, which disclosed eight convictions between 1997 – 2004.  Fonterra alleged that Mr Richardson failed to disclose his convictions, advised him that it was a serious matter, and commenced a process where dismissal was a potential outcome.  The investigation found that Mr Richardson had provided incomplete information when questioned about previous traffic and criminal convictions, and that Fonterra had relied on that information in making its decision to hire him.  It then found:
 
You have misrepresented yourself to the Company by failing to disclose all of your previous traffic and criminal convictions and as such we are terminating your contract with immediate effect.
 
Employment Relations Authority
 
Mr Richardson subsequently raised a personal grievance for unjustified dismissal.  In Fonterra’s defence, it then alleged that Mr Richardson had “deliberately” withheld the information.  When at the Employment Relations Authority, Fonterra then relied on the Contractual Remedies Act 1979 and claimed that it had cancelled Mr Richardson’s employment agreement. 
 
Fonterra had never put the allegation to Mr Richardson that he had “deliberately” misrepresented himself, and nor had it ever put to Mr Richardson that it was seeking to rely on the Contractual Remedies Act to cancel the agreement, rather than dismissing him. 
 
The Employment Relations Authority found that Fonterra had failed to establish that Mr Richardson’s actions were deliberate, and that it never invoked any reliance on the Contractual Remedies Act.  It found that Fonterra was not entitled to cancel the employment agreement.
 
The Employment Relations Authority carefully analysed the contractual arrangements that Mr Richardson had entered into.  Mr Richardson was offered and accepted the terms in a Collective Agreement.  That agreement contained a completeness clause.  While the particular completeness clause is not quoted in the determination, completeness clauses commonly state that the contractual arrangement records the entire agreement between the parties and no prior arrangements or agreements, and nothing previously represented or implied has any effect.
 
The Employment Relations Authority found that the Collective Agreement superseded all other documents.  As a consequence, Fonterra had no right to raise any matter regarding a misrepresentation as a ground of dismissal or use it to cancel the employment agreement.
 
The Employment Relations Authority found that because of the completeness clause, and the letter offering employment to Mr Richardson, his employment was unconditional.  There was nothing reserving Fonterra’s right to rely on a pre-employment misrepresentation to terminate the employment agreement or to cancel it under the Contractual Remedies Act. 
 
In Our View
 
Pre-employment misrepresentations are a difficult and technical part of employment law that many employers, and lawyers for that matter, are uncertain about. 
 
Technically, the employment relationship does not commence until an employer and employee have entered into an employment agreement.  As a consequence, any pre-employment misrepresentation cannot be misconduct as the employee has not misconducted him or herself during employment. 
 
This is likely to be the reason that Fonterra, or its lawyers, appeared to abandon justifying a dismissal in favour of cancelling the employment agreement under the Contractual Remedies Act. 
 
The Contractual Remedies Act most definitely applies to pre-contractual representations, including pre-employment.  However, if an employer wants to rely on the Contractual Remedies Act, they must do so at the time and leading up to the cancellation of the employment agreement.  That obligation arises under both the obligation to justify its actions and its obligations to disclose in good faith. 
 
The other issue relates to the use of completeness clauses.  These are extremely common in employment agreements.  Employers often insist on their inclusion as it protects any employer who misrepresents a position being offered when trying to recruit an employee.  However, to protect an employer from the pre-employment misrepresentations of an employee, it is necessary to include within the employment agreement, where there is a completeness clause, the contractual ability to hold the employee responsible for pre-employment misrepresentations. 
 
This case highlights the technical difficulties arising from pre-employment misrepresentations.  If you are concerned whether or not the employment agreements that you use will enable you to rely on a pre-employment misrepresentation or you are considering terminating on the basis of a pre-employment misrepresentation, it is important you seek legal advice. 
 
Topics: Employment Law
 
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