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What do employers need to be in place in employment contracts, when breach of policy by an employee occurs?

For more information contact Julia Adlem on 8410 9294 or send an email via this form.

There is an increasing practice by employers to manage the behaviours and conduct of employees at work by way of workplace policies. Workplace policies now commonly include anti bullying and harassment, workplace safety, IT usage, fitness for work and dress standards amongst more.

Whilst policies are aimed at setting expected standards of behaviour and conduct they are often based around statutory requirements. Consequently management may want to be able to rely on policies to uphold termination decisions and also to defend vicarious liability in circumstances of sexual harassment as appropriate.

There are a number of factors that will influence whether management can rely upon a policy; a fundamental premise is ultimately dependent upon how the policy has been incorporated into the contract of employment.

The most straightforward way of ensuring that policies do have contractual force is to make reference to them in a written contract or letter of offer and make it clear that they
are part of the contract.

It is therefore essential that the detail of the policy has been made known to the employee and further, that a breach of the policy may result in disciplinary action including termination of employment.

Reliance on policy

This principal was tested in the recent case of Batterham and Others v Dairy Farmers Limited t/as Dairy Farmers [2011] FWA 1230 (29 March 2011).

Dairy Farmers was successful in upholding the dismissal of seven employees who ignored the company policy on ‘good working relations’ (which prohibited some conduct, including downloading or displaying sexually explicit material).

The actions of the employer in relying upon the policy were significant, as in 2006 it had emailed all workers to inform them about employees committing similar offences, advised them of a series of training sessions and advised them that they would be required to sign an agreement confirming their understanding and acceptance for adherence to the Dairy Farmers’ email and internet policy.

The determination of Deegan C in Kolodjashnij v Lion Nathan T/A J Boag and Son Brewing Pty Ltd [2010] FWA 3258 sets out the general position in relation to the application of policy in that:

“Not every breach of a policy will provide a valid reason for termination of employment. However in circumstances where the policy is both lawful and reasonable and an employer has stressed the importance of the particular policy to the business and made it clear to employees that any breach is likely to result in termination of employment, then an employee who knowingly breaches that policy will have difficulty making out an argument that there is no valid reason for the termination”.

In Lee v Smith [2007] FMCA 59, the defence force was unable to defend the case made against it, given that no defence to vicarious liability was available pursuant to section 106 (2) Sex Discrimination Act 1984 (Cth) as ‘it was clear in this case that all reasonable steps were not taken by the Commonwealth’.

The Federal Magistrates Court considered the actions of the defence force; whilst there were comprehensive and appropriate equity and diversity provisions in place, it was clear that they were not adhered to. The Applicant was not given any training and as such could have been better equipped to deal with the reporting of sexual harassment incidents.

In light of recent decisions in this continually evolving jurisdiction, it may be prudent for employers to consider the following actions:

  • Ensure that any and all policies are brought to the attention of employees by making reference in the contract of employment and or letter of appointment;
  • Explain the detail of any and all policies in the induction process;
  • Retain records of such explanations;
  • Confirm declarations from employees for significant policies, such as use of company email, avoidance of harassment and drug and alcohol standards;
  • Consistently enforce the policies where breaches occur; and
  • Consider the audience and tailor communication to the group of employees that are intended to be covered.

In employment contracts, breach of policy should be treated with the utmost importance. If in any doubt as to the efficacy of your employee contracts and policies and for general advice on the application and compliance with the Fair Work Act 2009 within your business, contact Julia Adlem at Pace Lawyers on 08 8410 9294.

DISCLAIMER: this newsletter is not intended as legal advice; no reliance is to be placed hereon.