03/03/2015

A recent case looked at whether the employer's workplace policies are part of the worker's employment contract or simply 'aspirational'.

Many of us have encountered various workplace policies throughout our career – documents whose terms can range from very broad and positive statements posted on the lunchroom noticeboard to quite detailed and technical procedures.  But what weight should employees be able to place on such policies? And if an employer fails to follow their own policy, can the employee sue for breach of contract?

These questions have appeared before the courts a number of times, with the most recent being the case of Romero v Farstad Shipping. In that case, a sailor made a number of comments about her treatment by the captain posted to her employer.  Her employer decided that the comments in fact warranted a formal complaint and began an official investigation.  At the same time, the employer was also investigating claims from the captain that the sailor’s performance and attitude was lacking.

The sailor perceived she was being treated unfairly and lodged a claim that she was being discriminated against.  Although failing in first instance, she appealed on the basis that the employer had failed to follow their own policies and in doing so, breached their employment contract with her. The Court had to therefore decide whether the policy was a contractual term or merely guidelines.

Taking into account a range of factors including that the policy was regularly enforced, was contained in the initial job offer document and that it had quite clear obligations and requirements set out in it, the Court ultimately decided that the policy was in fact a part of the employment contract.  The employer was forced to pay the sailor’s legal costs and the question of damages is still being heard.

So can an employer prevent their workplace policy from being deemed a part of an employee’s contract? Unfortunately in most cases, whether a policy term forms part of an employment contract will depend on the overall circumstances.  

It is therefore vital that employers consider the possible implications for both employer and employee before putting any new policy into place.  Front and centre of such considerations should be the question “Would I as an employer be happy to follow these rules if the time comes?” If the answer is no, you may need to revise the rules you seek to enforce.   

Alternatively, the inclusion of a disclaimer into your policy documents stating they are not to be considered contractual in nature may also be of assistance.

For further information, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.