The Importance of Workplace Policies

Published 11 February 2021

Why do we have Workplace Policies?

Workplace policies are an essential tool for managing employees and can even act as a safeguard for employers when facing litigation. While their most crucial function is to set out what is acceptable and unacceptable in the workplace, policies can also produce the side benefit of creating a friendly and productive workplace environment.

Workplace policies have received a poor reputation, sometimes for being overly long or voluminous, and at other times for merely ‘stating the obvious’. However, in practice, a well-drafted set of workplace policies can play an important role in protecting the employers interests while creating a positive workplace culture.

Workplace policies can provide employees with the necessary benchmarks to feel confident in their work and conduct. They can also assist in creating consistency in the way situations are dealt with by managers across the business and at varying levels.

Workplace policies generally fall into three broad categories:

Policies establishing expected standards of behaviour of employees (e.g. code of conduct, social media use, bullying and harassment);
Policies that establish process (e.g. internal grievance resolution, discipline and performance review); and
Policies that govern the provision of employee benefits (e.g. redundancy).

Workplace policies provide employers with the benefit of not having to put every work expectation in an employment contract, which by its nature performs a different role than a workplace policy. Policies can be discretionary, and employers can often change a workplace policy without the consent or consultation with employees (depending on the underlying obligations in any applicable industrial instrument).

Not only can workplace policies provide employees with the clarity of what is expected of them in all aspects of their employment, they can also protect businesses from legal liability.

Depending on the nature of the workplace, some workplace policies are required by law. For example, using technology to monitor employees can be a very useful tool for work health and safety purposes, protecting a company’s proprietary rights to confidential information and intellectual property, as well as seeking to minimise workplace misconduct. However, pursuant to section 12 of the Workplace Surveillance Act 2005 (NSW), employers who wish to use electronic surveillance must have a surveillance policy in place.

In other circumstances workplace policies can protect a business when disputes arise. Employers can rely on policies to demonstrate that an employee was aware of the standards of conduct and have been treated fairly pursuant to the policy. Again, it is important to have a well-drafted policy that is also followed in practice; one with a clear, objective process of how to deal with workplace incidents.

What is the Legal Status of Workplace Policies?

While workplace policies are generally not enforceable contractual documents, they are still valuable at law. Where an employee makes a claim against an employer in court or the Fair Work Commission, an employer may be able to refer to a workplace policy as evidence in the matter. Conversely, if a workplace policy has not been enforced by employers previously, this may not help an employer’s case. For example, in Symes v Linfox Armaguard 1, an employee was dismissed for swearing at his supervisor. The Fair Work Commission found that while the swearing was misconduct, it was unfair to dismiss the employee for this as historically, compliance with the ‘no swearing’ policy had not been enforced at the workplace.

An employer should refrain from allowing workplace policies to be incorporated into the employee’s employment contracts, however, as this may create exposure to claims for a breach of contract by their employees in the event that the employer failed to comply with the workplace policy, claiming that the workplace policy was an incorporated term. As workplace policies can sometimes be aspirational in nature, this creates significant legal risk.

In Goldman Sachs v Nikolich 2, a workplace document provided that the employer would take “every practicable step to provide and maintain a safe and healthy work environment”. Nikolich claimed that the document was a part of his employment contract and Goldman Sachs had breached the contract and caused him psychological injury. The Court held that parts of the document were incorporated into his contract; this was partly due to the fact that the document was described as ‘general instructions’ in the letter of offer, Nikolich was required to sign the document and the document provided employee entitlements and set out directions to employees.

Similarly, in Romero v Farstad Shipping 3, the employee’s letter of offer included a clause that provided that “all Farstad Shipping Policies are to be observed at all times”. Romero claimed that the harassment policy had been incorporated into her employment contract and sought damages for breach of contract. The Court held that the policy formed a part of the employment contract as the language used made it clear that there was an expectation of mutual obligations and found that the employer had breached the employment contract.

These cases established the following indications of when a workplace policy is binding:

Promissory language is used.
Relates to fundamental conditions of employment, such as those usually found in an employment contract.
Language is clear and demonstrates the need for compliance.
The policy is known to the employee.
Objectively, a reasonable person in the position of the person being bound would conclude the person making the policy intended it to be contractually binding.

To avoid any doubt regarding the legal status of a workplace policy, an employment contract should state that the workplace policies do not form part of the contract.

Further, to ensure that compliance with workplace policies is an essential part of an employee’s obligations, an employment contract should include an express term stating that employees must make themselves familiar with and follow workplace policies. If properly drafted, this will have the effect of making workplace polices contractually binding on employees, without creating unnecessary legal risks for the employer.

An employer must also ensure that workplace policies providing benefits correctly reflect the relevant National Employment Standards, or they may risk being exposed to claims for breaching the Fair Work Act 2009 (Cth).

What is the Best Practice for Choosing and Drafting Workplace Policies?

While every business should carefully consider what workplace policies best suit their needs, and there are a range of needs for different industries, there are a number of policies that every workplace should have to best ensure compliance with relevant workplace legislation:

Workplace Health and Safety (WHS) Policy – this can include, for example, information on how to maintain and handle equipment, identification of the primary hazards at work, and staff training procedures.
Work from Home Policy and Checklist – this has become particularly important since the COVID-19 pandemic and should be considered an extension of the WHS Policy that is tailored for the home environment.
Overtime Policy – this can provide guidelines and procedures for overtime use, such as when an employee can be required to work overtime and how overtime is paid. This can be critical in protecting against underpayment claims.
Code of Conduct – this can be used to outline the ethical principles of a business, behaviour expected of employees both at work and towards its customers or community, and the consequences of violating the code.
Anti-Discrimination and Equal Opportunity Policy – this should reflect the Anti-Discrimination laws by addressing each type of discrimination comprehensively and include information on how employees can seek help and what the consequences are for harassment and/or discriminatory conduct. This will also assist in defending any claim that an employer is vicariously liable for the conduct of other employees in the workplace.
Internet, Email & Social Media Policy – which is vital to ensure the protection of the employer’s proprietary interests, as well as public reputation.

The following policies are also worth considering:

Drug and Alcohol Policy
Performance Management/Discipline Policy
Grievance Resolution

A well-written workplace policy is specific and written in plain language. It is best to avoid the ‘legalese’ that is often found in employment contracts. It should make use of numbered headings and sub-headings as needed, and include definitions of key words, especially those that might be industry specific. Language should also be considered; aspirational language may be appropriate for outlining the ethical principles of the business, but in Work Health and Safety policies, for example, it is best to use decisive language such as ‘employees must’ rather than ‘employees should’. For simple templates of workplace policies, businesses may borrow from government websites, such as the Human Rights Commission website. It is always best to use a policy that is tailored to your business.

Which Workplace Policies are Mandatory?

While businesses are generally free to determine which workplace policies are relevant to their workplace, some workplace policies are mandatory under Australian Legislation depending on your business practices, revenue, corporate structure and industry:

Workplace Surveillance Policy
- If an employer wants to conduct surveillance of the workplace or electronics, they must ensure that they comply with the Workplace Surveillance Act 2005 (NSW).
Whistle-blower Policy
- Public companies, large proprietary companies, and corporate trustees of APRA-regulated superannuation entities must have a whistle-blower policy (see the Corporations Act 2001 (Cth). However, even if an employer does not meet these mandatory thresholds, we recommend a simple version of the policy for employers in some cases.
Modern slavery statement
- From 31 December 2020, entities based, or operating, in Australia, which have an annual consolidated revenue of more than $100 million, are required to report annually on the risks of modern slavery in their operations and supply chains, and actions to address those risks (see the Modern Slavery Act 2018 (Cth).

The Importance of Workplace Policies

Why do we have Workplace Policies?

What is the Legal Status of Workplace Policies?

What is the Best Practice for Choosing and Drafting Workplace Policies?

Which Workplace Policies are Mandatory?

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