Many employers have written policies that supplement, and may
form part of, their employment contracts. Company policies often
reinforce and clarify the standards expected of employees and help
employers manage staff more effectively by defining acceptable and
unacceptable behaviour in the workplace.
Employers often provide their employees with handbooks or
manuals containing workplace policies and procedures, which
regulate such things as:
- use of company property (eg mobile phones, company vehicles or
- email and internet use;
- non-smoking at the workplace;
- drug and alcohol use;
- occupational health and safety (OHS);
- anti-discrimination and equal employment opportunity
- performance management/employee development.
Policies ought to be implemented and applied consistently and
fairly throughout the workplace.
What are the benefits of having company policies?
There are many benefits to having well-written company policies.
Aside from often helping an employer to defend itself against an
unfair dismissal claim, OHS prosecution or vicarious liability
claim, policies can demonstrate that an organisation is being
operated in an efficient and businesslike manner. Furthermore, they
can foster stability and ensure uniformity and consistency in
decision-making and operational procedures.
A good policy
A good workplace policy will be explicit. It will also clearly
state to whom the policy applies. Policies should be written in
plain English so they are easily understood by employees.
Workplaces employing staff with first languages other than English
must ensure that polices are translated for these employees.
A policy should also give the employer discretion in the
policy's implementation and the basis of that discretion should be
stated as part of the policy.
A policy should also help employees to understand how they can
comply with the policy and what to do if they cannot comply.
Thus, a good policy should:
Policies cannot be effective unless they are provided, and
explained, to all existing and new employees. This includes casual,
part-time and full-time employees, employees on maternity leave and
any independent contractors. Employers should explain how to comply
with the policies and the implications of not complying.
Furthermore, when changes are made to policies, it is important
that they are clearly and openly communicated to employees. Changes
that are not communicated to employees may be of no effect.
Courts and tribunals are unlikely to uphold dismissals for
breach of workplace policies if the policies have not been properly
communicated to employees or have not been applied
Understanding the policy
The case of Agnew & Ors v Nationwide News Ltd
highlighted the importance of ensuring that employees understand
your company policy and that any changes made to a policy are
communicated to employees. The former Australian Industrial
Relations Commission (AIRC) ordered the
reinstatement of four employees after finding they had
misunderstood their company's drug and alcohol policy and,
specifically, the penalties associated with their conduct. The
employees had defied their company's policy, which prohibited the
drinking of alcohol during lunchbreaks. An earlier version of the
policy had stated that employees (who breached the policy) would be
subject to "normal" company disciplinary procedures. However, three
of the four employees thought that a lesser penalty than dismissal
would apply to their conduct. The AIRC found their dismissal was
harsh in the circumstances.
Enforcement of policies and appropriate penalties
Disciplinary policies must comply with both the requirements of
the relevant legislation and any disciplinary provisions contained
in applicable awards or agreements. The grounds justifying
discipline should be clear. The use of warnings should be
explained. It is also important that the policy describes when
summary dismissal is warranted.
It is important that policies are applied consistently
throughout the organisation. If the implementation of the policy is
inconsistent, there is a greater chance that an employee dismissed
for breach of that policy could successfully claim he or she has
been unfairly dismissed. Thus, any breaches of policy should be
dealt with promptly and according to the procedure set out in the
In Australian Workers' Union, Tasmania Branch v Pasminco
Hobart Smelter (Administrator Appointed), the Tasmanian
Industrial Relations Commission (Commission)
recommended that a final warning issued to a worker who breached an
OHS policy on protective clothing be withdrawn because the company
had applied the policy inconsistently.
The employee was issued with a final warning the day after being
warned three times to button the collar of his protective clothing.
The company stated that its reasons for proceeding straight to a
final warning were that, as an experienced operator, the employee
should have complied with the OHS policy. The employee, however,
claimed he was too hot to button up his shirt and other persons had
not complied with the policy on several other occasions.
Also, after issuing the warning, the company permitted overseas
visitors into the same area without the required protective
The Commission held that the company's decision to immediately
issue a final warning was unfair in light of the fact that other
people were permitted into the area without the recommended
personal protective clothing. The policy must be seen to be applied
Zero tolerance policies
Although an employer may have a policy regarding certain
matters, for example, the use of email or dress codes, an
employee's failure to comply may not warrant summary dismissal.
There is a distinction between a code of conduct policy and a
"zero tolerance policy".
For example, in Selak v Woolworths Ltd, the full bench
of the AIRC held that Woolworths did not act unfairly when it
dismissed an employee for drinking during his lunch break,
confirming a previous finding of the AIRC that Woolworths was
within its rights to strictly enforce a policy of "zero tolerance"
for alcohol in the workplace.
Whereas in Budlong v NCR Australia Pty Ltd, the AIRC
found that a company did not operate a "zero tolerance policy" with
regard to inappropriate use of its information technology. A
long-term employee, who was found to have pornographic material on
his laptop computer, was dismissed according to the company's email
policy. However, another employee was only given a warning after
downloading similar images. It was also found that the company
allowed a culture which encouraged employees to view pornography by
failing to stop managers from setting a bad example to others.
Thus, although the company operated a code of conduct policy with
respect to pornography at work, this was not a "zero tolerance
policy" and the employee should have been given a warning rather
than being dismissed. Consequently the employee was reinstated
(subject to his undertaking to strictly comply with the company's
email and pornography policies).
What about enforcing policies that form part of the employment
In the Federal Court decision in Riverwood International Pty
Ltd v McCormick, the Full Court stated that employment
instruments such as workplace policies will be contractually
(a) the relevant policy is directly referred to in a document
purporting to be the "contract of employment"; or
(b) where it appears to the court that it was the intention of
the parties that the policy form part of the contract.
More recently, in Goldman Sachs JB Were Services Pty Ltd v
Nikolich, the Full Federal Court reconsidered the issue of the
contractual force of policies. Chief Justice Black stated that the
court should examine whether a reasonable person in the promisee's
position would think that the promisor's intention was to be bound
by the relevant part(s) of the policy in the
Employers need to carefully consider whether such policies
should form part of the employment agreement as there are both
benefits and drawbacks.
For instance, a clear benefit of incorporating policies into
contracts is that it enables employers to enforce such things as
disciplinary procedures against employees (where those procedures
are contemplated by the policy). However, it is also binding on the
employer and a company may be in breach of not only its own policy,
but the contract of employment, if it does not follow the
disciplinary procedure. This could result in a dismissal exercised
under the procedure being overturned and compensation for breach of
contract being ordered.
In Carrasco v Boral Window Systems Limited (2007), the
AIRC found that two employees were not given a sufficient
opportunity to respond to the reasons for their dismissal and thus
their termination of employment was harsh, unjust or unreasonable.
In that case, the two employees were accused of fighting at work -
however, they had in fact been fooling around when one of the
employees fell and injured his back. The company dismissed the
employees for gross misconduct on the basis that they were fighting
at the time of the incident. The AIRC concluded that the fall was
an accident between friends' horse playing and not fighting, and
further found that the crowded floor area had contributed to the
fall. Although disciplinary action was available to management - as
the site induction manual prohibited "horse play" - the manual
stated that the disciplinary procedure consisted of a recorded
warning, followed by a written warning for a further breach,
leading to instant dismissal for further breaches. The company had
failed to follow its own procedure.
Employers must ensure, in drafting their polices, that they do
not impose overly onerous obligations on the company that it may
not, or cannot, comply with. This is particularly important where a
policy is incorporated into an employee's contract of
Up to date, well drafted policies that have been effectively
communicated to employees can be used by employers to defend unfair
dismissal applications and also vicarious liability claims of
discrimination or sexual harassment.