Modern employment agreements often state that employer policies take the form of directives which must be followed by employees but are not binding on the employer and do not form part of the contract, i.e. you have to do as I say but I don’t!  It may seem hypocritical but the common law position is that this is reasonable and employers won’t be held to their own policies in this situation. So an employer may not be contractually obliged to follow its policies that set out, for example, how investigations or graduated disciplinary processes or redundancy consultations will be carried out or how bonuses are calculated or paid. Similarly, codes of conduct that set out fairness and integrity obligations do not contractually have to be observed by the employer.

Does this mean employers are free to do what they like, notwithstanding any policy statements? Well, no. The reality is that, whilst important, contracts of employment are often less important when it comes to considering an employee’s rights of legal action.  In a statutory unfair dismissal claim, employers can expect short shrift from the Fair Work Commission if they fail to follow their own policies on procedural fairness. Likewise with general protections and discrimination claims where the employer often faces a legal or practical onus to prove the dismissal was not for prohibited reasons. In workers compensation claims for psychological injuries, an employer can expect a claim will be accepted if they have not followed their own policies. Enterprise agreement dispute resolution provisions can also be used if expressed broadly.  Even once the more common legal options are ruled out, an employer might face a claim of unconscionable conduct under consumer protection laws or an equitable claim of estoppel on the basis of a reasonable expectation that the employer would follow their own policies.

So, when looking at an offer of employment, employees should look to see if there is a provision of this nature and ask for it to be removed or qualified. For their part, employers should be careful when wording policies so they are not creating a rod for their own back. Employers should also act reasonably and policies should be followed unless there is a very good reason.  Please contact us if you would like help in this area.