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Excerpts from this article first published in ‘Human Resources’ Magazine, Issue 108, 11 July 2006
The South Australian Industrial Relations Court has found that a manager of an Adelaide hairdressing salon had no right to ownership of a new car awarded to her as part of an incentive program.
In Arena v Mario & Jennifer Pty Ltd, the Court held it was a term of the incentive program that Ms Arena remained employed by Mario & Jennifer for a further 2 years before ownership of the car would be transferred to her. It was common ground between Ms Arena and Mario & Jennifer that the incentive program was discussed at Ms Arena’s job interview in 2000. She was told she could win cash, a trip or a car.
In 2000 and 2001 Ms Arena won cash and a trip to Bali. In 2002 she was told she won the car. She asked for the cash value and Mario & Jennifer then informed her of the term in the incentive program that she must remain employed for 2 years before ownership could be transferred to her. Ms Arena resigned. She argued that as she was not told about the requirement she remain employed for 2 years, it could not form part of her contract of employment. Mario & Jennifer argued that either; the discussion about the car in the employment interview was so vague that it had no contractual status, that it was a representation and therefore unenforceable, or that the entire incentive program including the condition that the winner remain employed for 2 years formed part of the contract of employment.
The majority of the South Australian Industrial Relations Commission agreed with Mario and Jennifer’s third submission holding, “if she is relying upon the incentive program to establish the entitlement to a car, then it must be that the whole of the incentive programme as it existed in practice was imported into the contract, and that would include the conditions set out in the rules”.
HR Tip
This case is an example of what can happen when terms of an employment contract are not clearly understood. Employers should be wary of statements made to employees during employment interviews and subsequent discussions. A written employment contract may state that it forms the entire contract between the parties exclusive of any other representation or statement.
Employers who make statements to entice employees that are not subsequently realised run the risk of facing action under Trade Practices legislation for misleading and deceptive conduct.
Gordon Jervis, Senior Associate
