The case of Walker is a significant and costly illustration of the liability that a company may expose itself to when it allows its officers to make careless or unprincipled representations during employment negotiations, in order to entice an individual to enter into the employment arrangement.

Walker was recruited by NatWest to take up the position of Senior Research Analyst in their Equities division (at the time the relevant defendant company was NatWest, the shares in which were later acquired by Citigroup). Walker was at the time employed at ABN AMRO, and he was expecting to receive a substantial bonus payment very soon. However, Walker and NatWest commenced protracted negotiation over the terms of his prospective employment. Simultaneously, there was some discussion over the timing of his resignation from the ABN AMRO role, as he was
anxious not to miss out on the bonus payment.

The letter of offer which NatWest sent to Walker referred to a document entitled ‘Executive Conditions of Employment’,
with the proviso that both the letter and the conditions “will form part of your terms and conditions of employment” but it wasn’t attached to that version of the letter. One of the ‘conditions’ was that either party could terminate the employment contract on one month’s notice.

During the negotiation process, NatWest officers made representations to Walker respecting his salary, guaranteed
minimum bonus payments, length of secure employment, and promotion prospects within the company. Soon after these representations were made Walker signed and returned his letter of offer, and was of the understanding that an employment contract had come into existence to which NatWest and himself were parties.
At some point in the process, however, NatWest’s Head of Research decided that employing Walker was no longer an attractive option, but at the same time encouraged him to negotiate a redundancy agreement with ABN AMRO, thereby allowing him to ‘burn his bridges’ with his former employer.

Walker was then told that the NatWest position was no longer available and that there was no contract in existence between them, as he had failed to sign and return all the documentation attached to the letter of offer. This was followed by a letter from NatWest withdrawing its offer of employment. Ultimately, Walker was informed that no position was available and that NatWest completely denied any contractual liability to him. Walker brought an action against the respondent in the Federal Court, claiming that NatWest had breached a valid contract and engaged in misleading and deceptive conduct by its behaviour towards him, which constituted a breach of sections 52 and 53B of the Trade Practices Act.

The primary judge found that a valid employment contract did come into existence and that the letter withdrawing NatWest’s offer was “plainly incorrect and misleading” and constituted a repudiation of this contract. However, the termination clause in the contract only entitled Walker to damages equal to one months’ notice of termination. The breaches of the Trade Practices Act also succeeded, as the primary judge held that NatWest’s representations were misleading, and Walker relied upon them to his detriment.

On appeal, Walker argued that representations made to him during negotiations formed part of the employment contract and the quantum of damages should account for these contractual breaches. The unprincipled behaviour of NatWest officers in encouraging him to end his career at ABN AMRO, in the knowledge that NatWest was no longer interested in employing him, Walker argued, should also be reflected in the quantum of damages awarded.

The Full Court held that although the ‘Executive Conditions’ were contractual terms, to interpret the termination clause literally would negate the representations made at the same time, which would be “an unlikely result in view of the surrounding circumstances and the purpose and object of the transaction, namely, the recruiting of a high level and high profile employee then in other employment.”

If the termination clause were read alongside the representation concerning employment into the next calendar year, then the clause would not become operative until the end of the next calendar year. Additionally, given the skill and experience of Walker, it was very probable that he would have continued to perform competently beyond the next calendar year. Consequently, damages awarded for breach of contract should be increased. The court accepted Walker’s proposal that damages awarded for contractual breach should equal the total earnings (including bonuses) of a NatWest employee of equal rank during the five years after the breach had been committed, minus 25% for contingencies.

The court avoided ‘double recovery’ for Walker’s economic loss by awarding no damages for the established breaches of the Trade Practices Act. But they increased the general damages component from $5,000 to $100,000, in compensation for the “serious long term effects” upon Walker’s personal life resulting from NatWest’s unethical behaviour. The total damages award came to more than $7,500,000.

Conclusion

In other jurisdictions – Canada, the United Kingdom – the courts have long since filled the vacuum created by Governments
“privatising” or “liberalising”, or “de-regulating” the employment relationship. That ideology now prevails in Australia on both sides. Apart from it underlining yet one more indication of the declining role of government (a shrinking public service and incremental privatisation of Government tasks) it removes protection for individuals.

People do not just accept their lot any more, though, and so increasingly look to the courts for judicial protection. The cases described above, when read in conjunction with other principles both home grown and imported, show that the needed protection is very much available. The future is the evaporation of Australia’s unique system of industrial arbitration. The future is the replacement of that ex-system by the rule of law in the Courts.