The Importance of Carefully Drafting Policies

June, 2015

By Clayton Payne

Does my business take the drafting of policies seriously? Who is responsible for drafting those polices? Do they need to be considered by a lawyer?

What if following a policy leads to an unintended contractual breach or breach of legislation?

These issues were recently examined by the Federal Circuit Court of Australia.

In Scullin v Coffey Projects (Australia), the worker succeeded in claiming a breach of contract, and more significantly, a breach of the relevant civil penalty provision in the Fair Work Act. This claim arose in part because the employer’s parental leave policy concluded that:

“an employee may take up to a maximum of 52 weeks paternity leave if the employee is the child’s primary care giver”.

The court found that this statement was misleading and in conflict with the relevant provision of the Fair Work Act, which required that in order to have access to the entitlement the worker “… has or will have the responsibility for the care of the child”, not that the employee “be primarily responsible for the day to day care of the child”.

It was noted that the employer’s policies formed part of the worker’s employment conditions.

Based on this policy, the worker did not apply for unpaid parental leave after his wife gave birth, as he considered that he was not entitled to it. Had the worker applied for and obtained unpaid parental leave, it was submitted that he would have had access to the return to work guarantee under the Fair Work Act.

The worker subsequently took unpaid leave, and on its expiry, was told by the employer that he could continue to be engaged, but only on a part-time or casual basis. The worker executed a revised contract of employment reflecting this change to part-time work.

Ultimately, the worker’s employment was terminated on the basis of redundancy.

The court found that the employer breached the worker’s contract for failing to pay him the correct remuneration from 1 May 2012 to 31 May 2013 (i.e. the difference between what he should have earned had his employment been full-time employment and not part-time over the period), and failed to pay the correct amount of accrued annual leave and redundancy pay on termination.

The employer was also found to have contravened the National Employment Standards for failing to apply the correct parental leave provisions of the Fair Work Act, by relying on the wording of its own policy.

All up, the worker was awarded approximately $170,000 in compensation. The amount of the penalty to be paid by the employer is yet to be determined.

Conclusion

This decision demonstrates the importance of taking care when drafting employment policies. In particular, if regard to legislation is required, consideration should be given to whether legal advice should be obtained in relation to their drafting.

The decision also shows that employers can be held liable to pay pecuniary penalties (of up to $51,000 per breach) in the event that they do not comply with the National Employment Standards.

Contact Mills Oakley

For more information, please contact:

Ross Levin | Partner
Melbourne
T: +61 3 9605 0070
E: rlevin@millsoakley.com.au

Malcolm Davis | Partner
Sydney
T: +61 2 8035 7932
E: mdavis@millsoakley.com.au

Adam Lunn | Partner
Melbourne
T: +61 3 9605 0868
E: alunn@millsoakley.com.au

Lisa Anaf | Partner
Melbourne
T: +61 3 9605 0857
E: lanaf@millsoakley.com.au

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