29 September 2017
Sam Cahill, Associate
It is common for employers in Australia to have a suite of workplace policies. Indeed, in recent years, it has become an unquestioned assumption that employers should have written policies concerning a range of workplace issues, including bullying and social media. In this article, we look at the advantages and disadvantages associated with workplace policies, and how an employer can maximise the effectiveness of its policy arrangements.
Benefits of Workplace Policies
Managing legal risks
An employer has various legal obligations with respect to work health and safety and the prevention of certain types of behaviour in the workplace, including discrimination, harassment and workplace bullying. An employer, and its senior officers, may face severe penalties for failing to comply with work health and safety duties. Similarly, an employer can be held vicariously liable for a failure to take appropriate steps to prevent, or respond to, unacceptable behaviour at work. Importantly, an employer can use workplace policies to:
- provide staff with information concerning work health and safety;
- explain the types of behaviour that are prohibited at work;
- outline the disciplinary consequences for engaging in prohibited behaviour; and
- establish processes for reporting behavioural or safety issues to management.
These policies can assist in managing the employer’s legal risks. By way of example, an employer may be able to rely on its policies to assist in demonstrating that:
- it complied with its work health and safety obligations;
- it took reasonable steps to prevent sexual harassment in the workplace, and is therefore not vicariously liable for such behaviour; and/or
- it had grounds to dismiss an employee who had engaged in unacceptable behaviour in breach of a policy.
However, the mere existence of policies covering these issues will not be sufficient. An employer will need to demonstrate that the relevant policy had been actively promulgated and enforced. This was highlighted in a recent case involving racial vilification in the workplace, in which the Federal Circuit Court made the following assessment of the employer’s policies:
“The official position taken by [the employer] is wholly exemplary. The code of conduct and other documents exhibited to the Court show that, on its face, [the employer] is wholly opposed to any form of racial or other unlawful harassment in employment. The difficulty, however, is that it is one thing to have these policies, no doubt sincerely embraced by the management of [the employer], but it is another to enforce them.”1
The employer in that case had failed to respond adequately to complaints of racist behaviour in the workplace, and thereby failed to enforce its policies regarding racial vilification. As a result, the Court found that the employer was vicariously liable for the unlawful conduct of its employees.
Clarifying expectations and ensuring consistency
Policies can be used to provide employees with clarification regarding the employer’s expectations. By way of example, an employer may have policies regarding appropriate workplace attire and attendance at work. Used in this way, workplace policies can be an effective method of delivering instructions to an employer’s entire workforce. They can also provide a basis for disciplinary action against employees who fail to comply with these instructions.
Policies can also be used to provide guidance to managers, and thereby ensure consistency of decision-making across the organisation. By way of example, a policy may provide guidance on:
- how and when an employee can be required to provide medical evidence in respect of a period of personal leave;
- how and when an employee may be issued with a formal warning for misconduct or unsatisfactory performance; and
- when the employer will provide support to an employee undertaking further study.
Policies of this kind may be especially helpful in organisations where managers are required to make decisions regarding employment issues without assistance from human resources practitioners.
Detriments of Workplace Policies
Limiting employer’s discretion
An employer will often have a significant amount of discretion when issuing instructions to employees and managing issues in the workplace (provided the employer complies with the relevant laws). For example, an employer may adopt one of a number of approaches when responding to complaints made by an employee, or raising concerns regarding an employee’s performance. However, an employer may have a policy that restricts this discretion by prescribing certain requirements, such as a requirement to:
- provide an employee with a certain amount of notice of a disciplinary meeting;
- provide an employee with written information regarding an allegation or investigation;
- complete a workplace investigation within a prescribed period of time; or • provide an employee with a certain number of warnings before terminating his or her employment.
Given the importance of maintaining an employer’s flexibility when dealing with employment issues, we generally recommend that employers refrain from introducing policies of this kind or that policies which do cover these issues retain a level of flexibility within which discretion can be exercised and the consequences for an employer of noncompliance are less onerous.
Legal risk associated with failure to comply
An employer may face legal action from employees if it fails to comply with its own policies. The main avenue of legal redress is for an employee to allege that the policy in question was incorporated into his or her contract of employment, meaning that a breach of the policy amounts to a breach of contract for which (unlimited) damages may be awarded.
Australian courts have recently considered this issue in the following scenarios:
- An employee’s contract of employment contained a promise to “abide by all Company Policies and Practices currently in place, any alterations made to them, and any new ones introduced”.2 The employer in question had a policy setting out generous redundancy entitlements, but refused to follow this policy in respect of the employee.
- An employee’s letter of engagement provided that the employer’s policies “are to be observed at all times.” 3 The employer in question had a “Workplace Harassment and Discrimination Policy”, which stated that the company would “handle complaints promptly, with confidentiality, impartiality and with sensitivity to the complainant’s needs”. The company failed to do so in respect of a complaint made by the employee.
- An employee was required to sign a policy document titled “Working with Us”, which provided that the company would “take every practicable step to provide and maintain a safe and healthy work environment for all people”. 4 The employee argued that the employer breached this policy by allowing him to be bullied at work.
In each of these scenarios, the court found that the promises contained in the employer’s policy were incorporated into the employee’s contract of employment, and were therefore enforceable against the employer under contract law.
Conversely, in a recent High Court decision, the Commonwealth Bank avoided being held liable for failing to follow its redundancy policy as the documentation made it clear that processes outlined in the policy, such as those dealing with redeployment, did not give rise to a contractual entitlement.5
- Regularly evaluate whether your organisation’s current policies are necessary and appropriate. In doing so, it is important to distinguish between policies that are designed to protect the organisation (eg, anti-discrimination, work health and safety, sexual harassment, confidential information) and other policies that relate to operational matters (eg, performance management, dress code, study leave). It may be that policies falling into the second category are unnecessary or inappropriate.
- Ensure that your organisation’s employment contracts expressly state that its policies do not form part of the employee’s contract of employment (and that this wording is also reflected in the policies) and do not use language that conveys a promise to employees or imposes an obligation on the organisation.
- Ensure that all staff in your organisation, and especially managers, understand and follow your organisation’s policies. This can be done by encouraging staff engagement and providing regular updates and training. Your organisation should strive to create a compelling narrative as to why its policies exist and why they must be followed.
- Murugesu v Australian Postal Corporation & Anor  FCCA 2852
- Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193.
- Romero v Farstad Shipping (Indian Pacific) Pty Ltd  FCAFC 177.
- Goldman Sachs JBWere Services Pty Ltd v Nikolich  FCAFC 120
- Commonwealth Bank of Australia v Barker  HCA 32.