Contracts and policies

A. Contracts

1. Implied terms

Every employment relationship involves a contract between an employer and an employee. This contract may be verbal or in writing or may sometimes involve a mix of the two. It is not necessary to specifically agree on the terms of a contract for one to exist. The fact that an employee starts work for an employer brings with it certain fundamental implied terms, such as the right to payment for work performed and a duty of mutual trust and confidence. In summary, employers have a duty:

  1. To provide the employee with the opportunity to earn wages by providing work;
  2. To allow the employee to perform their work;
  3. To provide, as far as practical, a safe workplace (although note strict requirements under workplace health and safety legislation, e.g, the Workplace Health and Safety Act 1995 (Qld));
  4. Not to conduct themselves in a manner likely to destroy or seriously damage the relationship of confidence and trust between the employer and the employee; and
  5. To treat people with respect and not berate them or damage their reputation.

Employees have a duty:

  1. To obey reasonable and lawful orders and to be co-operative;
  2. To be ready, willing and able to perform work;
  3. To use skill and care in their work;
  4. Of fidelity (honesty), confidentiality and good faith; and
  5. To perform their job safely.

2. Written contracts

The inherent difficulty with verbal contracts or relying on implied terms (in cases where there is no specific written agreement or only a limited verbal agreement) is that there can be later disagreement about what was agreed in the first place. This is why a written contract is always preferable. The contract should set out the main terms of the employment and be signed by both the employer and the employee. Whilst agreements are subject to minimum legislative entitlements and any applicable award or collective agreement requirements, there is a large range of matters which should still be covered, such as:

  • Dates of commencement and duration of employment;
  • Duties and accountabilities;
  • Personal presentation;
  • Training;
  • Probation (if longer or shorter than the statutory requirements);
  • Hours of work;
  • Remuneration;
  • Confidential information;
  • Intellectual property;
  • Employer policies;
  • Dispute resolution;
  • Performance appraisal and unsatisfactory work performance;
  • Grounds for suspension and termination;
  • Termination notice;
  • Post employment restraints;
  • Redundancy;
  • Relationship of the parties; and
  • Governing law.

It is also common practice for statutory entitlements to be repeated in a common law contract for the sake of completeness.

It is worthwhile to invest some time and money in the preparation of employment contracts that suit your business needs and reflect each individual position. Efforts at this stage may reap significant dividends later in the employment relationship. It should go without saying that an employment contract should be finalised and signed by both parties before a new employee starts work. It may be much more difficult to get a current employee to sign a contract because at this point, terms and conditions of employment cannot be changed without the agreement of both parties and an employee may feel threatened by an attempt to implement a written employment contract after they have been working for some time.

Any formal employment contract must take into account legislated minimum rights and entitlements and any award or enterprise agreement requirements.

Some employers may say, “I haven’t got the time or the money to worry about employment contracts now. I will do it when I have the time/money”. This is a potentially risky commercial decision which may turn out to be a false economy. For example:

  • you employ a person in a pivotal management role where they are privy to your business secrets and know how. After some time in the role, the person resigns and sets up their own business in competition to you. A number of your clients take their business to your former employee. What can you do? Well, unless the issue has been addressed in the employment contract, there may not be a lot that you can do. Many employers have learnt the cost of failing to protect their customer base and intellectual property;
  • an employee receives bonuses as part of their employment. After terminating the person’s employment, you receive a claim for unpaid bonuses. Unless there is something in writing about the timing of bonus payments and what happens in the event of termination of employment, you may be faced with a long and expensive legal claim process which you may ultimately lose if the matter goes to hearing;
  • you have an employee who makes a significant improvement in a process or item which you created. The employee then leaves the company and commences using the improved process or manufactures the improved item somewhere else. Unless you have addressed the matter in a contract, the common law rules will apply which may not to be your advantage.

It is wise to have formal agreements for all employed positions, even for part time and casual and what you may consider to be fairly lowly positions. Even a simple letter of appointment is better than just relying on award provisions or implied terms. It is also good practice to review employment agreements every year or two to ensure they reflect the current requirements of the role being carried out by the employee.

3. Written contracts

Hand in hand with a good contract goes a good position description. A detailed position description setting out required tasks and performance benchmarks which is reviewed on a regular basis will go a long way to managing both yours and the employee’s expectations of a role.

B. Policies

It is desirable that your business establish a set of policies for your employees to follow at work. These policies can address such matters as:

  • procedures for taking sick and personal leave, annual leave and leave without pay;
  • disciplinary procedures;
  • sexual harassment and discrimination;
  • workplace bullying;
  • workplace health and safety;
  • office procedures;
  • work expenses and refunds;
  • meals and breaks;
  • attendance and punctuality;
  • uniforms;
  • use of phone and mail systems;
  • use of equipment and vehicles;
  • payment of wages/salary;
  • overtime and time in lieu (if applicable);
  • other employment;
  • drugs, smoking and drinking;
  • accidents;
  • performance review policies.

It should be apparent that you can implement as many policies as you consider necessary and they can be as short or as complex as you wish. Any policies should be tailored to suit your particular business needs. The main point is that any policy should be explained to employees, they should be provided with a copy (either in hard form or electronically) and they should sign an acknowledgement of receiving and understanding the policies. It is also of assistance to have a quality assurance system for the updating of policies and ensuring that employees have the latest version of same.



Geoffrey Atfield v Jupiters Limited trading as Conrad Jupiters Gold Coast

The case reinforces the importance for employers of ensuring that employees are not only made aware of but also understand workplace policies if employment is to be terminated for violation of company policy. The practice at Jupiters Casino was to have prospective employees sign a document called an Induction Checklist which included an acknowledgement that an employee had read and understood the contents of the Staff Employee Handbook and agreed to abide by the conditions in the handbook. The policies included a staff prohibition on gambling. Mr Atfield had signed an acknowledgement but subsequently placed a bet on the TAB and then withdrew it almost immediately upon being informed by the TAB operator that staff could not bet. The employee had stated that he did not know of the prohibition but was dismissed anyway for gross violation of company policy.

The Commission found that it was unrealistic to expect an employee to fully read and digest the entire handbook following a 2 hour induction process in a group environment; that there was a very real probability that the employee did not understand the effect of what he had signed; that the procedure used to update and inform new and ongoing employees of policies and policy changes was not effective; that there was some confusion amongst staff about the full extent of the employee gambling prohibition and that it was not unreasonable to accept that the employee made a genuine and honest mistake. Accordingly, the dismissal was harsh, unjust and unreasonable. As difficult as it may seem, it really does pay to put in place systems to ensure and show that employees fully understand workplace policies.

Whilst policies are an important tool, you should take care to ensure that they take the form of a directive rather than a mutually binding condition of employment which may be able to be used by an employee in a claim against the business.