The given case focuses on Max, an advertising executive, who has recently started working with Creative Advertising Ltd. on the acceptance of employment offer from the company. During negotiations, the company made a promise regarding offering an immediate access of a generous employee share scheme. However, the final contract signed by Max had no mention of such term. Later on, Max also discovered a company policy that allows the employees an access to such employee share scheme after the completion of two years in the organization.
An employment contract can be defined as an agreement that take place between an employee and the employer that specifies the terms and conditions of the contract. Both duties and duties of the employers and employees are contained in the employment contract (Cartwright 2016). The employment contact covers the terms and conditions that are derived from a number of sources including:
- the written and oral terms or express agreement,
- implied terms by law associated with the relationship between employee and employer,
- good faith and duties of fidelity,
- terms implied by the practice or custom of a specific industry or business (Buddelmeyer, McVicar, and Wooden 2015, 257).
The parole evidence rule provides that the parties who have reduced their agreement to a final written contract are prevented from making the introduction of other evidence at a later stage as evidence having different intentions then the contract terms. However, there are some exceptions to this rule. This means that the evidences are admitted in cases where the formation of the contract has some defects, terms of the contract are ambiguous, there are certain problems with the consideration, condition required to occur before the performance of the contract (Tsui 2015, 160). The prevention of introduction of other evidences is due to the reason that the parties have reduced their agreement to a final contract and it is the decision of the parties themselves to leave such evidences out of the contract (Epstein, Archer, and Davis 2014, 49).
Express terms of the employment contract are the terms that are mentioned specifically either orally (at the initial interview) or in writing and are agreed by both employee and the employer. Express terms include terms related to working hours, pay, holidays, etc. On the other hand, implied terms are the terms that are not the part of the written contract as they are obvious due to which they are no recorded. Statutory rights are included in the implied terms such as duties like duty of care and right to equal pay. Every employment contract implies a duty of mutual trust and confidence (Chen- Wishart 2012).
Section 18 of the Australian Consumer Law (ACL) provides that misleading or deceptive conducts must not be undertaken by a person in the context of trade or commerce (O'Gorman 2016, 307).
Furthermore, Clause 31 provides for the employment arrangements and specifies that a person must not engage in a conduct which is expect to mislead the individual seeking employment with regard to the terms and conditions or nature of employment (Hunt 2015, 7).
The employment contract of Max should cover the terms agreed at the time of negotiations. The decision taken by Max to join the organization was based on the pre- promise made by the employer. Taking into consideration the company policies, the employees are eligible to access employee share scheme after serving two years for the organization which can also be termed as the post promise made by the company. In this case, Max will be eligible for employee share scheme after the completion the said period in the company. Therefore, there will be no legal access to the scheme at the time of joining the company (Freedland et. al. 2016).
Since the written contract of employment have been signed by Max, the parole evidence rule is application which prohibits the parties for introducing any evidence relating to the previous agreements in the court on the subject matter of contract. The judge or jury is permitted to consider only the written contract in the cases where the parole evidence rule is applicable (Dowling Jr 2016, 347). Therefore, generally the previous discussions made between the parties are not considered by the jury. In Max’s case, the applicability of parole evidence rule provides that the employer does consider it an important fact to be included in the employment contract. May be the employer did not wanted to employ Max on the basis of such terms. However, subsequent agreements can be introduced between the parties (Morris et. al. 2014, 144).
Since this term was agreed by the employer at the time of negotiations, it was an express term and was required to be included in the employment contract. If it was not included, Max had no legal access to the scheme (Poole 2016).
In the given case, the major promise made by the company in the course of negotiations was the access to employee share scheme on the acceptance of employment offer. The decision of Max to accept the offer was dependent on this offering by the company. In other words, the act of Max was based on the reliance on such representations made by the company. Therefore, Max should be compensated for damages because the contract was entered into due to the reason of employer’s representation to provide the employee share scheme (Preston and Yu 2015, 30).
Similar facts were noticed in Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee)  FCA 430 where it was decided that it was reasonable to expect that the discussions made at the time of negotiations will be included in the employment contact. On this basis, it was found that a claim is established under ACL and the employer was ordered to pay the damage or loss suffered by the employee (Kryger 2015).
Therefore, in this case, Max is eligible for compensation from Creative Advertising Ltd. as his decision to join the organization was based on this offer. He must have declined other competitive offers in order to take the benefit of the employee share scheme. After completing two years in the company, he can access the employee share scheme (Shields et. al. 2015).
The answer will be different in case the promise was made by the company after the completion of 6 months at the workplace in recognition of excellent work done by Max. In such a situation, Maxx will be able to avail such offer and no changes will required to be made in the employment contract. It will become an express term of the employment contract. A copy of the agreement specifying the benefits will be provided to Max. The terms of the employment contract will remain intact. Such benefit provided to the employee in the form of employee share scheme will not become the part of the employment contract (McKendrick and Liu 2015). Even it is not in accordance with the company policy to provide employee share scheme to the employees before the completion of two years in the organization, it will be valid as it is recognition of excellent work done by the employee. The companies have provision to provide such benefits on the basis of their performance.
The given case focused on Max, an advertising executive, who has recently started working with Creative Advertising Ltd. on the acceptance of employment offer from the company. Issue was faced by Max regarding the fact that the promise made prior to the formation of contract was not covered under the contract. The applicability of the above specified rules in the context of the given case provides that Max will not have legal access to the employee share scheme now, however, he will be eligible for the scheme are the completion of two years in the company. Parole evidence rule will prohibit the employee to introduce an evidence at a later stage. Max should be compensated for damages because the contract was entered into due to the reason of employer’s representation to provide the employee share scheme. In case, the promise was made by the company after the completion of 6 months at the workplace in recognition of excellent work done by Max, he will have legal access to the scheme.
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