Flexibility and control over your Employees
Labour laws are skewed in favour of the Employee. How can Employers retain control? The Employer often relies on a number of Workplace Policies. Workplace Policies are rules for Employees. But are these Policies enforceable on the Employee? What if you change the Policies after signing the Employment Contract?
The answer is how you build your Employment Contract. There are three approaches:
1. Don't mention the Policies in the Employment Contract
2. Mention Policies as a directive
3. Mention the Policies as contractual terms
Which is correct? That depends on how important enforceability on the Employee, freedom to update the Policies, and flexibility around Employer obligation, are to you.
Where the Policies are included as a contractual term, there is no ambiguity as to their enforceability. On both the Employee and Employer. However, the Policies can't be easily changed.
In comparison, where the Policies are included as a directive, they form part of the Employee's duties. They are enforceable as duties. But the Policies may not be enforceable on the Employer: Geoffrey Atfield v Jupiters Limited trading as Conrad Jupiters Gold Coast. This is useful if your ex-Employee takes you to court. Including the Policies as a directive also gives you the freedom to change them. This gives you control of your business.
Our Employment Contracts give you this freedom. See a sample of our Employment Contract here.
Why have Rules for Employees?
There are rules for Employees to protect Employers.
Workplace culture is changing at a frenetic rate. Every business is expected to reinvent itself regularly. Employment is now fun, cool and relaxed. Perhaps this improves morale and productivity.
Changes from formal to casual workplaces cause a blurring of professional and personal conduct. Employers must clarify boundaries and expectations. You also keep your business up to date with laws and rules. That’s the job of Workplace Policies.
You can’t put everything into an Employment Contract. Your Employee signs the Employment Contract only once. You need the power to change Policies without getting Employee approval. Your policies can include:
- Discipline procedures,
- Office procedures,
- Work expenses,
- Use of equipment,
- Drugs, smoking and drinking,
- Social media,
- Workplace health and safety, and
- Bullying, harassment and discrimination.
These things change. Technology, laws and your business practices are dynamic. With our Employment Contract, you get the flexibility to update your policies when you need to.
When does the Employment Contract help?
Refer to Policies in your Employment Contract. Direct your Employees to follow them. But don't include the Policies as a contractual term. You then get flexibility.
There are specific rules for how you refer to the Policies in the Employment Contract. If you include the wrong wording, the terms of the Policy are not enforceable on the Employee.
Our Employment Contracts follow two cases. They are Riverwood International Australia Pty Ltd v McCormick and Romero v Farstad Shipping (Indian Pacific) Pty Ltd. The Courts state that you must reference the Policies in the Employment Contract if you wish them to be enforceable.
Riverwood states that you validly incorporate your Policies into your Employment Contract when you satisfy these three factors:
1. “Abide By”
Your Employment Contract requires the Employee to “abide by” your Policies. This creates an obligation for the Employee. By signing the Employment Contract, they must do what you tell them. This wording creates a directive. It allows you to amend the Policies without varying the Employment Contract. You do not automatically need Employee approval.
These Policies principally, if not exclusively, provide entitlements to Employees. For example, the entitlement to a workplace free of discrimination. The Employer has a mutual obligation to provide this entitlement. It can put an undue burden on the Employer. If you don't want to be obliged to provide the entitlement you must clearly state this. Your statement is "that the Policies do not form part of the contract, but that Employees are obliged to comply with them". Our Employment Contract does this.
We have been shocked by the number of Employment Contracts we have reviewed recently that don’t use the correct wording.
2. Clear, Ascertainable and Unambiguous
The reference to the Policy must be clear, ascertainable and unambiguous: Romero. The Employee must know what they are required to do, and when. The test is whether a reasonable person has the same understanding.
3. Updating Policies
The statement in your Employment Contract refers to:
- current Policies,
- alterations from time to time, and
- new Policies.
Does this mean you can actually update them without affecting the Employment Contract?
Not entirely. You can make updates that do not change the essential nature of the Policy. Think spelling, formatting, updating dates and places.
However, your powers to make substantial changes are constrained by the requirements:
- to make changes in line with the Employment Contract's intentions: Hospital Products Ltd v United States Surgical Corporation.
- to not act unfairly: Ansett Transport Industries v Commonwealth.
If you overstep these, then you may need to agree with your Employee on the updates prior to implementing them.
Our Employment Contract gives you the flexibility so you can operate your business your way. Our Employment Contracts stand the test of time. They to comply with any mandatory rules and minimum conditions of employment. As these mandatory laws change your Employment Contract automatically updates. See a sample of our Employment Contract here.
Employment Contracts help you, the Employer. The way you refer to your Policies is crucial.
Written by Adjunct Professor, Dr Brett Davies,.Maddie Mulholland, UWA LLB, BCom Student, and Jing Zhi Benjamin Wong, UWA Law and Society Student.
For more information telephone us.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
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