When does a workplace entitlement becomes a contractual right?

 

An employer who failed to follow its own workplace policies has been successfully sued for breach of contract in the Full Court of the Federal Court.

 

The applicant in this case was a second officer on a supply ship and employed by the respondent, Farstadt Shipping (Indian Pacific) Pty Ltd. 

 

Like most employers, the respondent had a Workplace Harassment and Discrimination Policy in place which set out the procedure for dealing with complaints. When the applicant made a complaint of sexual discrimination, these procedures were not followed.

 

The Court had to determine whether the workplace policy formed part of the applicant’s employment contract for the purposes of establishing whether there had been a breach of contract.

 

It was found that the policy did form part of the employment contract, binding the employer to its obligations to investigate complaints in accordance with its established procedures.

 

It was successfully argued that the employer failed to follow its own policies and in failing to comply with them, breached its own employment contract.

 

The employer was found to have breached the contract and ordered to pay the applicant’s costs.

 

While it is important to ensure your business has policies in place on issues such as bullying and harassment or drugs and alcohol, employers should ensure these policies do not form part of their employment contracts, lest they become a binding upon you.

 

To have your contracts reviewed, ensure their compliance with the legislation and minimise risk to you as an employer, contact Nevett Ford on (03) 9614 7111.