Subsequently changing an employee's role may not constitute misleading and deceptive conduct or breach of contract where the change is brought about by evolution in thinking and in direction.
In Keays v JP Morgan Administrative Services Australia Ltd [2008] FCA 1603 an employee, Mr Keays, sued his employer JP Morgan for damages for breach of contract and misleading and deceptive conduct when his employment ended in June 2008. During his employment, his role changed from public sector banking to private sector banking and upon termination JP Morgan agreed to pay him a severance payment consisting of three months pay in lieu of notice and leave entitlements.
Prior to joining JP Morgan, he claimed JP Morgan promised him pay (including stock options) totalling $1.275 million, and managing director status. He argued that the representations made by JP Morgan were not fulfilled. The case centred upon a change to his position throughout his two years of employment, during which a foreign exchange portfolio was removed and given to another employee.
In handing down his decision, Justice Robert Buchanan ruled that Mr Keays was unable to show that he was entitled to the unvested stock and that it survived the termination of his employment. He also found that Mr Keays had a contractual right to remuneration, but had not suffered any financial prejudice as a result to the change of his role. The judge found that "no occasion arose to assess the impact of this change on any bonus". Therefore it was impossible to assess any damages. The judge was also not satisfied that JP Morgan mislead Mr Keays about the nature of his position that he was offered. He ruled that the changes that were made to Mr Keays' position were a consequence of "evolution in thinking and in direction" and that the implications for Mr Keays' position emerged well after he was engaged.
The case demonstrates that where an employee's position changes over time due to the natural evolution of the business, it does not necessarily mean that the employee was misled if their position also changes.
Truman Hoyle is a Sydney based law firm serving the new economy industries across the Asia Pacific region. Australasian Legal Business has recently ranked the firm's Telecommunications, Media & Technology and Intellectual Property practices as top-tier in Sydney. The firm was named Australian Law Firm of the Year in 2005 and again in 2006, for firms with 50 lawyers or less. In 2009 our firm was awarded the prestigious ACOMM Award for Professional Services Excellence at the annual Australian telecommunications industry awards.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
