Incorporation of Policies into Employment Contracts

Overview:

• If policies are incorporated into employment contracts you may be liable if you fail to comply with those policies.

• It is best practice to include a clear statement that workplace policies do not form part of the contract so as to avoid the risk.

• You should make sure you communicate policies effectively to your employees.

What are policies?

Employee policies often called an employee manual, is a document given to the employees which outlines your company’s policies, culture and expectation of behaviour and work. Employee policies commonly include a code of conduct, health and safety, hours of work, leave provisions, redundancy, training and development and termination policies.

Best practice for incorporating policies

You should be careful not to incorporate the terms of your employee policies and procedures into your employment contracts. If the terms of policies are incorporated into your contracts, employees will then be able to sue you as their employer for breach of contract if you fail to comply with your own policies.

It is best practice for employers to make sure that the employment contract contains a clear statement that workplace policies do not form part of the contract. The statement should also ensure that employees are nevertheless obliged to comply with the policies and should they be in breach of the policies then this may give grounds for the employer to terminate them under the employment contract. Again, a clear statement needs to be made that the employer is under no obligation to comply with the policies. Not every breach of a policy will provide a valid reason for termination of an employment. It is important that you communicate each policy to the employee and make clear the importance of those policies, and that breach of those policies may result in termination.

How to communicate policies

Keep the following recommendations in mind for how to communicate policies to staff:

1. Provide copies up front

Once an employee has agreed to an employment contract, provide them with copies of any policies that you have. If your contract refers to the policies in a number of places we recommend providing the employee with a copy of your policies at the same time as the employment contract.

2. Discussion of the policies

Provide the employees the opportunity to ask questions, and take all reasonable steps to ensure that the employee understand the information contained in the policy.

3. Provide training where required

Some policies may require more extensive and intensive training to ensure that the employees understand how the policies apply to them.

4. Request employee sign off

It is important that staff read and understand the document to become familiar with the company’s policies. We recommend that you ask the employees to provide you a written statement that they have done so as evidence. Keep this written statement as a record.

Updates to policies

Where you update or amend the policy we recommend following the communication steps again.

Key takeaway messages

You should carefully consider whether you wish to incorporate the terms of your employee policies into your employment contracts. There are large risks involved where you may be liable if you fail to comply with these policies.

We recommend that you include a clear statement that workplace policies do not form part of the contract.

You should ensure that staff have read and understand your policies.

If you require assistance, please contact us today. Our contact information is available on the last page of this handbook.