Are HR Policies binding on the
Local Government
Mr Brendan Taylor
Employee Relations Advisor
16 November 2012
Ask the audience?
• If the Local Government breached an HR Policy
what would be the legal cause of action?
– Tort (e.g. Negligence, Nuisance)?
– Breach of the Competition and Consumer Act
2010- Misleading or deceptive conduct?)
– Breach of contract?
– Unfair dismissal?
– Adverse action?
Breach of Contract
Breach of Contract
• Employee will usually base their argument in
breach of contract.
• Case examples where employees have been
awarded damages because policies were
incorporated into the employment contract.
– Breach of a policy entitling cash payment on redundancy Riverwood International Australia v McCormick [2000] FCA
889
– Breach of a policy on commission - Akeemeena v Murray &
Ors [2009] NSWSC 979).
– Breach of a policy on health and safety - Goldman Sachs JB
Were and Sons v Nikolich [2007] FCAFC 120
How can policies create
contractual obligations?
How can policies create
contractual obligations?
Express Terms
– Contractual terms may expressly state the
obligations of the parties.
– Beware of using an express term stating that
the employee must “abide by” HR Policies.
Riverwood International Australia v McCormick [2000] FCA
889
– Consider an express term stating that policies
are not contractual in nature.
Yousif v Commonwealth Bank of Australia [2010] FCAFC 8
How can policies create
contractual obligations?
Implied Terms
• In order to imply a term into a contract a term
must be:
– Reasonable and equitable
– Necessary to give business efficacy to the contract
– Be so obvious that it goes without saying (such as specific custom or
practice or implied by law)
– Be capable of clear expression
– Not be contradicted by an express term of the contract
BP Refinery (Westernport) Pty Limited v Hastings
Shire Council (1977) 52 ALJR 20
Implied Mutual Trust and Confidence
• A body of jurisprudence that every Australian
employment contract has a term implied which
states:
“The employer has a duty to not, without reasonable and
proper cause, act in a manner calculated to destroy mutual
trust and confidence”
Malik v Bank of Credit and Commerce International (SA)
(in liq) (1998) AC 20
• Malik is an English case not binding on Australian
Courts.
Implied Mutual Trust and Confidence
• Up until now MTC mixed reviews in Australia
– NSW Court of Appeal has acknowledged its existence
Russell v the Trustees of the Roman Catholic Church (2008)
72 NSWLR 559 (Full Court)
– Federal Court has in some cases doubted its
existence.
McDonald v Parnell Laboratories (Aust) 2007 FCA 1903
(Buchan J)
– High Court has made an oblique reference to
it.
Koehler v Cerebos (Australia) Limited [2005} HCA 15
(Majority)
Ground Breaking Case on MTC
• Barker v Commonwealth Bank of Australia
[2012] FCA 942
– The Federal Court confirmed that all Australian
employment contracts do have an implied term of
MTC.
– Senior Executive at CBA had an employment contract
and the MTC term was implied into that contract
– CBA committed a “Serious Breach” of a HR
redeployment policy which amounted to a breach of
the implied term of MTC.
Hypotheticals
• Would a “Non Serious” breach of an HR policy
amount to a breach of the implied term of MTC?
• Would the following clause in an employment
contract be valid?
This employment contract expressly excludes the
implied term of mutual trust and confidence
Policies (Aspirational Vs Promissory)
• In the Barker case Besanko J stated:
Each party expects that policies will be adhered to,
subject to the fact that some of the statements are
no more than aspirational or descriptive.
• If policies are merely aspirational statements, and the
language is not promissory in nature, such policies will
not be binding on the Employer
Goldman Sachs JB Were and Sons v Nikolich
[2007] FCAFC 120
Policies (Aspirational Vs Promissory)
Harassment Policy
The Local Government’s culture and “family” approach means each person is
able to work positively and is treated with respect and courtesy. It is within the
context of our culture that all people within the Local Government team will
work together to prevent any unwelcome, uninvited, and unwanted conduct
which makes another team member feel offended, humiliated or intimidated in
any work related situation and where that retain is reasonable in the
circumstances
The professional behaviour and conduct of each team member is important. It
is a reflection of the person, the Local Government and our attitude. Further
information may be obtained from Human Resources.
– Does this policy contain binding obligations?
Policies (Aspirational Vs Promissory)
Health and Safety Policy
The Local Government will take every practicable step to provide and
maintain a safe and healthy working environment for all people.
Prevention is the most effective health and safety principle. Through a
shared responsibility, co-operation and support from all people, we will
realise our health and safety objectives and create a safe work
environment for ourselves and our team. Each member of the team has
a duty to take the care for their own health and safety and other team
members affected by their actions.
• Does this policy contain binding obligations?
Policies (Aspirational Vs Promissory)
Grievance Policy
We are committed to make sure that anyone who has a genuine concern will
be supported and the issue will be handled with discretion.
The door is wide open at all times for people to discuss any issue, not only with
Department Heads, Directors and Human Resources, but also with the Local
Government CEO. Such discussions are welcome as the Local Government
has been built on the principle that it is team with common interests and ideals.
This interest extends beyond the range of career and business issues to more
personal concerns.
We are committed to make sure that anyone who makes a genuine complaint
will be able to discuss his concern confidentially, will be supported by the Local
Government and is not penalised in any way.
• Does this policy contain binding obligations?
Practical Advice
Practical Advice
• Do include an express term in employment contract
stating that policies are not contractual in nature.
• Do (if appropriate) draft policies in a descriptive and
aspirational fashion (as opposed to putting defined
obligations on the Local Government).
• If policies must put defined obligations on the Local
Government, don’t commit the Local Government to
things that cannot be done.
• Do make an effort to know your Local Government’s
policies so that the Local Government can adhere to
those policies when a situation arises.
Questions
• Any questions?