Back to Basics - Common Mistakes Employers Make with their Policies

HR Managers currently have their hands full.

Unemployment is at a 50-year low. Finding staff is hard. All stakeholders are nervous whether the Australian economy can achieve a soft landing as the RBA battles to bring down inflation.

In addition to these pressures, low-income workers (and indeed, some middle-income workers) are doing it tough. Mortgage repayments are increasing, rents are up, and a trip to the supermarket is costing more than ever. It is understandable if some of these pressures are manifesting in sometimes challenging attitudes and behaviours at the workplace.

With so much going on, it’s easy to lose sight of the basics.

In my experience, it’s not a lack of understanding of the legally complex that gets employers into hot water. Rather, it’s an inadvertent failure to do the simple things.

Ensuring employees sign contracts before they start, and once employed, when their position changes is a case in point. Paying minimum wages is another.

To help HR Managers in these turbulent times, I share my observations of common mistakes employers make with their policies.

Trying to Help Line Managers

Many employment policies provide line managers with guidance about what they should or should not do when faced with a particular situation. The classic example here is a disciplinary policy which describes the best practice process a line manager should follow before making a decision whether to dismiss an employee.

There are two problems with this approach.

First, line managers often don’t follow policies anyway.

Second, an employer’s failure to follow its own policy is not only embarrassing, but it can also result in an otherwise ‘fair’ dismissal being unfair under the Fair Work Act 2009 (Cth).

If an employer wishes to educate its line managers about best practice disciplinary processes, then there are other ways to achieve this.

Making Policies too Complex

Simple policies are more likely to be followed.

Whilst some complexity may be necessary for certain policies (for example, anti-discrimination policies), employers should aim to make employment policies as simple as possible.

The best policies I have seen are those which clearly tell employees what they must and must not do.

Incorporating Policies into Employment Contracts

The issue of potential incorporation of policies into an employee’s contract of employment is legally important. If an employer breaches its own policy where:

• the policy is incorporated into the employee’s contract of employment; and
• the employee has suffered loss and damage,

then the employer can expect to be liable to the employee for such loss and damage for breaching the contract.

The cases show employers need to be very careful of:

• the language used in employment contracts when referring to policies. For example, the requirement employees will "abide" with policies has been held by a Court to incorporate policies into an employment contract; and
• the language used in policies. If the language used is promissory then there is a greater risk of the policy being incorporated into an employee’s contract. Alternatively, a policy which uses merely aspirational language is less likely to be incorporated into an employment contract.

Employers should also consider including clauses in their policies and employment contracts which deal with this important issue of incorporation.

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This article is general information only. It is not legal advice.