I have written previously about the question of whether an employer’s policies find themselves incorporated into the employment contract between the employer and the employees. In a case in the Federal Court instigated by a female employee against her employer for vicarious liability for discrimination based on her sex arising from allegations made against her manager, a ship captain, Justice Marshall has described the issue as “vexed”. His Honour declined to hold that the policies were incorporated, essentially on the basis of their lack of solemnity.
“The issue of whether a company’s policies form part of its contracts of employment with its staff is a vexed one and depends largely on the circumstances of any given case. In Goldman Sachs JBWere Services Pty Ltd v Nikolich[2(2007007] FCAFC 120; (2007) 163 FCR 62 at , a majority of the Full Court (Black CJ and Marshall J; Jessup J dissenting) recognised that the test was “objective. What matters is what the language used, in context, would have led a reasonable person… to believe” (see also Riverwood International Australia Pty Ltd v McCormick  FCA 889; (2000) 177 ALR 193 at  per Lindgren J). As Black CJ said at  in Nikolich, in the context of a statement in a policy favouring a “family approach” to the work environment:
The difficulty is that the statement in issue is not explicitly contractual in its language and could be seen as merely aspirational. It appears in a document of mixed content and purposes and, although these include contractual purposes, at least the primary repository of the employment contract is unambiguously elsewhere. The context is, however, decisive… if the statement that the firm “will take every practicable step to provide and maintain a safe and healthy work environment for all people” were no more than an aspirational representation, imposing no obligation on the maker, it would be seen as an exercise in hypocrisy. The statement is a reflection of, and is central to, WWU’s expression of the “culture” of the firm and its approach to its staff, and its aspirations about the approach the employees will take to each other. The language used, taken in the context as a whole, points to the statement embodying a contractual obligation and the trial judge was correct in holding that it was a term of the contract.
Conversely, in Commonwealth Bank of Australia v Barker(2013) 214 FCR 450 (“Barker FC”), Jacobson, Lander and Jessup JJ held that the breach of a particular workplace policy in that case did not amount to a breach of the implied term of a contract as the policy was not part of the respondent’s contract of employment. This was due to a reservation or qualification attached to the policy in that particular case, as explained by Jessup J at -.
As was the case in Nikolich, there is much in Farstad’s Policy that could be described as “aspirational”. The fact that new Farstad employees are made to sign the Policy is not decisive in rendering it a contractual document (see Nikolich at ). There is nothing in the Policy itself which suggests that its terms are terms of Farstad’s contracts of employment with its employees or are otherwise expressly or impliedly incorporated within them. There is quasi-contractual language on the first page of the Policy, saying that Farstad “will… handle complaints, meet all legal and statutory obligations and ensure employees… are not disadvantaged in their employment conditions or opportunities”. However, such language is insufficiently specific so as to amount to a binding contractual obligation. It has a predominantly aspirational quality. ”
Romero v Farstad Shipping Pty Ltd (2014) FCA 439 delivered on 6 May 2014