Workplace policies: are they binding?

by David Cross

While the law is increasingly prepared to accept that policy handbooks form part of the contract of employment where the matter in issue has related to the enforcement (under the law of contract) of one or more policies1 , there is less uniformity when the matter in issue has been the fairness (or otherwise) of a dismissal.

Part of the employment contract?

It has become increasingly common for employers to use a handbook of policies and rules regulating the conduct of employees in the workplace. Typically, the new employee receives a brief letter of appointment, one clause of which will state that the employee must comply with the employer's policies as they exist from time to time. Usually, the employee is given a copy of the handbook at the same time that he/she receives the letter of appointment. It is also not uncommon for the letter of appointment to contain a provision whereby the employee acknowledges having read and understood the policy.

There are clear advantages in using such an approach. For one thing, it means that the letter of appointment or written contract can be a shorter and more 'user friendly' document. However, because the policies exist separate from the written contract of employment, there will always be an issue over the extent to which the policies effectively form part of the employee's obligations.

Gambling policies

In Atfield v Jupiters Limited2 , an employee of a casino challenged his dismissal for alleged gross misconduct for having failed to comply with one of the casino's policies. The casino's relevant policy forbade any employee from gambling on the premises at any time. The employee had visited the casino during a day off and had sought to place a bet at a TAB in the premises.

The TAB employee completed the transaction but then (because of suspicion that the individual was an employee of the casino) advised him that gambling at the TAB was prohibited to staff. Upon hearing this, the employee immediately requested to cancel the transaction. The bet was cancelled and the money refunded.

The matter came to the attention of management of the casino. Management interviewed the employee to confirm that he had placed the bet. Upon this being confirmed, his employment was terminated.

The evidence established that, when he started the job, the employee was given a two-hour training session concerning the casino's handbook of rules and policies. This was followed by a seven-hour orientation program. The handbook of policies contained about 100 different rules and requirements. At the time of commencing the employment, the applicant was required to sign an acknowledgement recording that he had read and understood the handbook.

The Commission ruled that the dismissal was unfair because there was doubt over whether the employee had understood that gambling in the premises was prohibited. The Commission found that Jupiters ought to have conducted follow-up sessions with staff to determine whether the policies were fully understood.

Breach of IT and drug and alcohol policies

In Harvey v Qantas Airways Limited3 , an employee challenged his dismissal for breaching the employer's workplace policies. The employee had used his employer's email system to ask another employee to obtain a prohibited drug. At issue were the policies concerning proper use of email and policies concerning the use of drugs.

The employer established the most recent steps it had taken to inform and assist its employees about the appropriate use of its IT system. In addition, fortnightly meetings were held for duty supervisors. The employee attended these meetings.

The employer had introduced a computer sign-on message that was displayed on screen each time an employee logged on to the system. The sign-on message notified the relevant employee of their usage obligations under the system as well as the possibilities of such use being monitored by the employer. The employee was required to click the 'OK' dialogue box in order to complete the log-on procedure.

The Commission held that the employer had done all that it reasonably could be expected to do to ensure its employees were aware of policies that governed their employment and the consequences of non-compliance with those policies. There was nothing particularly unusual or unclear in the policy documents, and the requirements and obligations imposed by the employer also contained guidance, examples and instructions and, importantly, notified the employee as to possible consequences for misuse.

The Commission found that the employee should have been aware that the emails he had sent were inappropriate and provocative. The Commission held that the termination of the employee's employment was for a valid reason that directly related to his conduct and to the operational requirements of the employer and was not harsh, unjust or unreasonable in the circumstances.

Regular reinforcement of policies

These decisions demonstrate that employers need to ensure that all workplace policies are brought to an employee's attention, not only upon commencement of employment but also on a regular basis during the employment relationship. They also suggest that each policy needs to be considered on its own merits. If a policy implements a workplace rule that is novel, unusual or complex, the cases suggest that the employer is under a more extensive obligation to publish, explain and refresh.

1. See , for example, Reynolds v Southcorp Wines Pty Limited [2002] FCA 712
2. PR 925334 10 December 2002
3. PR926844 20 January 2003


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