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Breach of Policy or Breach of Employment Contact?

There have been a number of cases over the last couple of years concerning whether or not certain breaches of employment policies constitute a breach of contract, thereby enabling the applicant to seek compensation, usually in the form of monetary damages, for this breach.

In Romero v Farstad Shipping (Indian Pacific) Pty Ltd [2014] FCAFC 177 (22 December 2014), the Court found that the relevant policy was more “aspirational” but the policy was still found to be a part of the employee’s contract of employment. This case concerned an email sent by Ms Romero that set out her concerns stating that she felt bullied by Captain Martin, her sea captain on a voyage.

In concluding Ms Romero’s contact of employment incorporated the Farstad’s Workplace Harassment and Discrimination Policy (Policy), the Court considered:

  1. Ms Romero’s letter of engagement;
  2. Application of the Policy to its employees and the training in respect of the operation of the policy
  3. If there was a requirement to sign the Policy.

In considering the above, the Court ruled that there was a contractual obligation to comply with the Policy and that the employer had failed to comply with the Policy.

Implications of the decision:

  1. An employer could be in breach of a contract for failing to comply with a workplace policy;
  2. Therefore, it is important that those drafting employment contracts and workplace policies avoid creating unintentional obligations; and
  3. The employers must take care to comply with the terms of policies, especially where they may form a part of the employment contract.

Note: The content of this blog post should not be considered legal advice however, if you would like to speak to someone about how the contents of this post, please contact (03) 7019 9200 or Amy Nhan at amy.nhan@aderolaw.com.au.