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Should you incorporate disciplinary policies in employment contracts?

Bill Fitzgerald

Incorporating company policies into employment contracts or other industrial instruments can provide for robust compliance, but this practice can also create legal risks for complacent employers, writes AREEA principal consultant Bill FitzGerald.

THE recent case of Gramotnev v Queensland University of Technology [2015] QCA 127, provides a timely example of how employers can be exposed to claims for breaches of an  employment contract for not adequately following a company policy outlined in that contract.

Involving the termination of a University employee, this case hinged on a near decade-old letter of engagement that stipulated the University’s disciplinary policy of requiring all terminations to be ultimately approved by a University committee before actioned.

Despite there being a strong case for termination based on the employee’s work history, the Queensland Supreme Court found that the University failed to strictly comply with its own policy and thus was potentially exposed to claims from the terminated employee.

Incorporating a detailed disciplinary policy in the original letter of engagement left the employer exposed in the event that it did not follow a step-by-step policy drafted many years ago. This could have been avoided if the employer made sure to comply with the policy, or prepared the employment contract in such a way that the policy did not form part of it.

The most effective way of achieving this is to expressly state in an employment contract or enterprise agreement that employees have an obligation to be familiar with current policies and procedures, but that these do not confer any legal rights or form part of the contract.

This means that the policies and procedures can be changed without impacting the contract or leaving an employer exposed to legal action if it does not strictly comply with its own policies.

While it is important for employers to protect themselves from a standard case of disciplinary action or termination becoming a legal nightmare, it is good practice to comply with all workplace policies as a way of being transparent with employees and building a harmonious workplace culture.

When drawing lessons from this case, a good place to begin is to review all employment contracts, particularly those where workplace policies are stipulated, to ensure they are up-to-date and comply with federal and state workplace laws. Employers may also wish to review inductions and training content if policies and procedures have some contractual force.

If in the likely event that your workplace policies and procedures have changed over time, it is recommended that both employees and supervisors/managers be provided refresher training to ensure consistent application and compliance.

To discuss this issue in more detail with Bill FitzGerald, please contact the AREEA Hobart office on (03) 6270 2256. Alternatively, contact an AREEA workplace relations expert at your nearest AREEA office.

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