In the first significant case involving employment advertising under the Fair Trading Act, a Christchurch District Court judge yesterday fined the Prudential Assurance Company of New Zealand Ltd a total of $23,000.
Prudential had pleaded guilty to seven charges laid under section 12 of the Fair Trading act. That section prohibits misleading or deceptive conduct relating to employment. The charges related to the recruitment of salespeople during 1995 to its retirement planning office in Christchurch.
The company had made the claim in its advertising "Our marketing department are making more leads than our sales team can sell". That claim was attractive to prospective salespeople as it suggested to them that they could concentrate on selling the product to people who had already indicated an interest, and not waste time trying to find such people. In fact the leads provided to the Christchurch salespeople were only around six per week, whereas they would have been able to follow up around 25 leads per week.
Another problem with Prudential's advertising during this period was that the advertising did not disclose that salespeople would need to make four sales from their own contacts before becoming eligible to receive any leads. Salespeople were not advised of this fact until the latter stages of the selection process.
The third feature of the Commission's case involved verbal representations to some employees during the recruitment process that they would receive at least three qualified leads per day. In fact, Prudential generally failed to provide that number of leads to its Christchurch salespeople during this period.
In sentencing the company, Judge Costigan indicated that, but for a number of mitigating factors, the penalty would have been higher. These included the fact that, at the time, Prudential had contracted for a third party to be involved in the marketing aim of its retirement planning division, that it had pleaded guilty and that it had since put in place a rigorous policy to ensure that its employment advertising was now accurate. Judge Costigan said that, in view of these measures, it was very unlikely that Prudential would reoffend.
Commerce Commission Chairman Dr Alan Bollard said that the case highlighted for all employers the need to ensure that job advertisements fairly reflected the position actually being offered. They should not try to make the position sound more attractive than it is so as to entice a larger range of applicants. It was also not acceptable for companies to advertise jobs in a misleading manner with the intention of giving the correct impression at the interview stage. Companies engaging in such practices might open themselves up to prosecution under the Fair Trading Act. Courts can impose fines under the Act of up to $100,000 against offending companies. Offending firms may also be liable to civil claims taken by those who respond to the advertising and find that the job differs from that advertised.
Media contact Fair Trading Act Manager, Rachel Leamy
Phone work (04) 498 0908, home (04) 479 6334, cell 021 662 773
