It’s in the Contract……

Workplace Policies: Are They Legally Binding?

A recent decision of a Queensland appeal court raises some interesting questions about the role that workplace policies play in the employment relationship, and specifically whether they form part of the employment contract.

In 2009, the employment of a lecturer at a Queensland university was terminated for serious and wilful misconduct. The lecturer alleged that:

• In breach of its own policies, the university failed to consider his applications for promotion properly.
• His dismissal was unfair.
• He was bullied, harassed, intimidated and subjected to psychological abuse by university staff.
• The university engaged in coercive practices.
• The university failed to address his concerns and complaints, and responded to them inappropriately.
• The university failed to manage his work environment in a reasonable and responsible way.
• The university failed to provide him with a safe work environment.  

The lecturer also argued that as the policies formed part of his employment contract, he was entitled to contractual damages of more than $2.5 million.

The trial judge found that the policies did not form part of the employment contract, although they could still regulate the employment relationship. This meant that the lecturer was not entitled to sue for damages for any failure by the university to follow its own policies.

What happened on appeal

The lecturer appealed the decision to the full court of the Supreme Court of Queensland, which handed down its decision  earlier this month.

On the whole, the full court agreed with the original decision, saying that there was a difference between a statement of policy, which could often be viewed as aspirational, and a contractual promise.

However, there was one exception to this. The lecturer alleged that for a period of many years he had been subjected to bullying and harassment by senior staff. Despite his complaints, the university had failed to deal with the matter. The Senior Staff Disciplinary Policy provided for a four-phase approach to such complaints, and the lecturer alleged that the university failed to follow that approach when investigating his complaints.

The full court found that this was in effect a contractual promise, and so it allowed the lecturer’s appeal on this question alone. For all other matters, it upheld the original decision.

Implications for employers

This decision is important for two reasons.

The first is that it is a reminder to employers that policies, procedures and Enterprise Bargaining Agreements (EBAs) need to be dealt with carefully in an employment contract. Workplaces need established policies and procedures to ensure that they run smoothly and efficiently, but it should not necessarily follow that those policies and procedures form part of the employment contract. A contract cannot and should not regulate every small detail of an employee’s existence in the workplace. Compliance with the contract would be near impossible if that were the case. Every time a change, however minor, is made to a policy or procedure, every employee’s contract would need to be renegotiated. The workplace would grind to a halt under the administrative burden.

An employment contract should make it clear that policies, procedures and EBAs do not form part of the employment contract, while at the same time outlining the employer’s expectation that those documents are complied with as the employee goes about their duties.This means that the employee cannot sue the employer for damages for any breach of policies, procedures or EBAs.

The other reason that this decision is significant is that it serves as a reminder to employers to regularly review policies and procedures to ensure that:

• They are up-to-date and reflect current law.
• They are being complied with. 

Taking care with policies and procedures

If policies and procedures are not being complied with, employers should consider whether they should be amended or even dispensed with. In the absence of clear wording excluding policies and procedures as contractual terms, employers could be exposed to claims for damages if they are not following their own policies and procedures. Drafting effective wording for employment contracts and reviewing policies, procedures and EBAs requires careful consideration.