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Employers warned to keep their promises.
Two recent decisions of the Federal Court
serve as a warning to employers to adhere to
their workplace policies and honour the
promises they make to current and
prospective employees.
In both cases, the employer was held to be
bound by the promises it made in general
company policies even though the promises
were not expressly included in the
employment contract and the employers were
held to liable to pay substantial damages of
between four and five years’ pay with
interest and future loss of income.
Given the restrictions on unfair dismissal
claims imposed by WorkChoices it is likely
that employees will increasingly look to
civil proceedings for breach of contract.
These cases demonstrate that
employers need to ensure that they treat
employees appropriately in performance
management and grievance investigation
processes and also carefully review how they
draft their employment contracts and
policies.
They also demonstrate how
mishandling of a formal compliant about
co-workers intimidating and threatening
behaviour can lead to sizable damages being
awarded – in one case $515,000 plus costs.
There is also an added cost to the business
beyond financial penalties – bullying and
harassment leads to unmotivated staff,
increased absenteeism and higher staff
turnover. An employment contract that
provides for an annual performance review
and none is conducted may also leave an
employer open to a breach of contract claim.
In the first case the employee had lodged a
grievance against a fellow worker which was
not investigated or resolved in a timely
manner. The employee later claimed he
suffered an illness that resulted from his
former employer failing to adhere to its
policies about provisions of a safe and
healthy workplace, preventing harassment and
handling grievances.
The Supreme Court of NSW also recently found
that employers have an implied duty of good
faith, and mutual trust and confidence even
where there is no written employment
contract. In a separate case an employee was
reinstated and then sought damages including
$350,000 in costs following the employer’s
delay in commencing a misconduct
investigation and its failure to interview a
key witness face to face.
Following these cases it is clear that
provisions in workplace policies can be
legally enforceable as contractual
provisions and employers should take care in
drafting employment contracts and policies
so as not to be left open to breach of
contract claims. Employers should carefully
consider their dealings with employees so as
to ensure they are acting in good faith
otherwise their actions may lead to an order
for damages to an affected employee.
This publication is provided by way of
general guidance only and is not to be
construed by the reader as legal advice or
as a recommendation to take a particular
course of action in the conduct of their
business or personal affairs. You should not
rely upon the material as a basis for action
that may expose you to a legal liability,
injury, loss or damage and it is recommended
that you obtain your own legal advice
relevant to your particular circumstances.
Savvy Human Resources Associates Pty Ltd and
their agents Disclaims All Liability For Any
Loss Or Injury Suffered, Howsoever Caused,
As A Result of Relying Upon The Content Of
This Publication In The Making Of Any
Commercial Or Personal Legal Decisions.
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