The importance of a well drafted contract of employment or letter of engagement

On 1 May the Full Bench of the Fair Work Commission delivered a decision, which highlights the importance of a well drafted contract of employment or letter of engagement, as may be the case.

The decision is Jeremy Lee v Superior Wood Pty Ltd.  It involved a claim for unfair dismissal by Mr Lee.

Mr Lee’s contract of employment that clause 2 provided as follows:

“2.2     Various policies, procedures and work rules also exist for the safe operation of Superior Wood Businesses and the welfare and interest of those who work for the organisation. 

 2.3      You are required to comply with the conditions of employment as identified in the Enterprise Agreement, Policies, Procedures and Work Rules at all times. Policies are displayed at various locations throughout the operations:

• Superior Wood Intranet
• Lunchroom noticeboards

 2.4      A copy of the display (sic) policies is also attached.”

After Mr Lee commenced employment with Superior Wood Pty Ltd (“Superior Wood’), Superior Wood introduced a site attendance policy, which made it compulsory for its employees to provide their fingerprint, to be used to authenticate their right to attend the premises. Mr Lee was directed to comply with the policy, refused to provide his fingerprint and therefore comply with the policy, his employment was terminated, and he filed an application for unfair dismissal.

The Fair Work Commission found that:

1. Mr Lee’s contract of employment did not oblige him to comply with the policy, as it was not a policy referenced in the contract of employment, or contemplated by the contract of employment;

The Decision stated that:

“As can be seen, the contract required Mr Lee to comply with the “various policies, procedures and work rules that exist” and that “are displayed at various locations” and that were attached to his contract in November 2014. A strict reading suggests that only those policies, procedures and work rules in place at the time of entry into the contract of employment were within scope of the requirement to comply.”

“The Policy came into existence well after he was employed, and there is no evidence that Mr Lee agreed to vary his contract of employment to incorporate the Policy as one of its terms. His refusal to comply with its terms is evidence to the contrary. We are not satisfied that compliance with the Policy was a term of his employment.”  and,

2. the direction by Superior Wood for Mr Lee to comply with the policy was unreasonable in the circumstances.

The Commission found for the employee, agreeing that the termination of his employment was unfair.

The Decision stated that:

“… we consider the direction to Mr Lee to submit to the collection of his fingerprint data, in circumstances where he did not consent to that collection, was not a lawful direction.”

Implications for employers

It would be wise for employers to take some immediate steps to minimise the risk that befell Superior Wood:

1. put in place a compliant privacy policy which is clear about what employee personal information may be collected, and how and when it may be collected;
2. obtain the employee’s consent to the collection and use of such information;
3. require prospective employees (ie before they become an employee) to acknowledge that:
   • it is a condition of their employment that they comply with your policies and procedures then in place, and as varied or added to from time to time; and,
   • they have read your policies and procedures.

From an evidentiary perspective, this would best be done by way of a written offer of employment, which offer contains all the terms of the employment and has attached to it copies of all policies and procedures (or at least those that you consider critical to your operations), and require the prospective employee to acknowledge having read and understood the policies, as part of providing his or her acceptance of the offer.

If you have any questions or need assistance with drafting a contract of employment or letter of engagement, please do not hesitate to contact me or the team at Turnbull Hill Lawyers.