Representations vs Warranties when hiring
You’re recruiting for a key role. During interviews and negotiations, the candidate makes statements about their qualifications, experience, licences, ability to work certain hours, or eligibility to work in Australia. You rely on those statements when deciding to offer them the job.
Fast forward a few months and it turns out that some of those statements weren’t true. Employers often discover too late that they may be dealing with misrepresentation. What you can do then depends on a critical distinction: was the statement a representation, or is it a warranty in the employment contract?
What’s the legal difference?
A representation is a statement of fact made before the contract is signed, which induces the other party to enter into the contract. In the hiring context, this often includes things said in interviews, resumes, cover letters or informal discussions.
If a representation turns out to be false and it is not written into the employment contract, you generally cannot sue for breach of contract. That doesn’t mean you are stuck, but your options are different. Depending on the circumstances, you may have other legal recourse.
Contrastingly, a warranty is a promise written into the employment contract. For example, a clause stating that the employee warrants they hold required qualifications, have the right to work in Australia, or have disclosed any restraints of trade.
If a warranty is breached, you have access to contractual remedies, including damages. In some cases, a serious breach may also justify termination. While not every warranty breach gives an automatic right to terminate, a breach that deprives the employer of the substantial benefit of the contract can support termination at common law or under the contract itself.
Why this matters in practice
Whether a statement is treated as a representation or a warranty can materially change your risk exposure and your leverage.
If you want to rely on what a candidate says, the safest course is to convert critical statements into contractual warranties. That means:
- Clearly drafting warranties into the employment contract (not just relying on resumes or interviews)
- Being explicit about what happens if those warranties are breached
- Aligning termination rights with those warranties to avoid uncertainty
Remember, your employment contracts are legal documents, and so, they need to be prepared by a lawyer to ensure you are adequately protected.
On the flip side, if you want to draw a line under pre-contract discussions, your contract should say so. Entire agreement and non-reliance clauses can help limit arguments about informal statements made by an employee although they are not bulletproof and won’t exclude all statutory claims.
The bottom line is that if it matters to your hiring decision, you need to put it in the contract. Anything omitted from the employment agreement is legally weaker, harder to enforce, and far more expensive to argue about later.
When was the last time you had your employment contracts reviewed by a lawyer?
Get in touch to discuss your options with our team.