Policies incorporated into contracts are binding
The High Court of Australia (HCA) has overturned a Supreme Court of Victoria Court of Appeal’s ruling that damages for psychiatric injury due to unfair dismissal were too remote and not recoverable under contract law.
The HCA found that the employment contract did incorporate the respondent’s disciplinary policies, making them binding. It also ruled that liability for psychiatric injury was within the scope of contractual duties related to dismissal and was not too remote, given the serious breach circumstances.
The HCA considered the following questions in making its deliberation:
Was a particular contract of employment incorporating the respondent’s disciplinary policies as terms of the contract?
Was liability for psychiatric injury caused by the respondent’s breach of that contract beyond the scope of the respondent’s contractual duty concerned with the manner of dismissal?
Was liability for psychiatric injury too remote in the circumstances of the particular contract?
In each of these questions, the HCA said ‘yes’. Vision Australia had incorporated their policies into the employment contract. In doing so, it bound them to follow their policy to the absolute letter. The Court found that in failing to do so, Vision Australia had breached their own policy and therefore the contract.
The HCA stopped short of saying that the disciplinary process caused the psychological injury. A collective sigh of relief can be heard for those who regularly conduct disciplinary investigations and actions.
WHAT DOES THIS MEAN FOR YOU?
- Review your contracts to ensure that they do not contain terms that contractually bind you to policies
- Review your Performance Management Policies to ensure that you have enough flexibility to manage performance nuances without flouting the policy.
- If you have a Performance Management Policy, make sure you comply with it.
- Elisha v Vision Australia Ltd [2024] HCA 50; BC202417949
When Common is not so Common, and Agreed in Writing is not Agreed in Writing
Much has been said about the APESMA case with regard to single-interest authorisations. However, another major case has reinforced the rather broad scope of the common interest test and been the first to test the operation of s 249 (1D) (b) that excludes parties from single-interest authorisations if they have already agreed in writing to bargain for a proposed singe-enterprise agreement.
In this case, the Commission determined that three regional councils in Victoria are had ‘clearly identifiable’ common interests because all three were a) local councils; and b) located in regional Victoria. Arguably, a rather broad application of this test and it will be interesting to see if this affects scope orders when considering if the group are fairly chosen using the measure of operationally, geographically or organisationally distinct.
There are two substantive clauses that may exclude an employer from being the subject of a single-interest authorisation. Firstly, if an agreement is within the nominal expiry date, and secondly if they have already agreed in writing to bargain for a proposed single-enterprise agreement.
The Goldfields Council argued that they and the Australian Nurses and Midwives’ Federation (the ANMF) had already agreed in writing to bargain for a proposed single-enterprise agreement for the purposes of s 249(1D)(b) of the Act. However, the Full Bench determined that the test for agreed in writing is not satisfied by indicating willingness to attend a meeting by email.
The preamble to the ANMF’s log of claims was also not an agreement in writing to bargain for a proposed single-enterprise agreement given that the email attaching it expressly stated that it was “subject to change through the next members meeting dependent on the ASU’s position moving forward”.
Therefore, the Full Bench was not satisfied that Goldfields Council and the ANMF at any time agreed in writing to bargain for a proposed single-enterprise agreement for the purposes of s 249(1D)(b) of the FW Act.
WHAT DOES THIS MEAN FOR YOU?
- The ‘clearly identifiable common interest’ test is relatively broad. Don’t assume that you will be immune from single-interest bargaining on geographical grounds.
- Ensure that all parties are abundantly clear that bargaining has commenced. There should be no ambiguity around this step in the process.
- Australian Municipal, Administrative, Clerical and Services Union V Central Goldfields Shire Council [2024] FWCFB 444; BC202417338
High & dry
Prescribed medicinal cannabis is an issue that will become more prevalent as individuals seek options for health management. The management of this issue is compounded by there being no current globally accepted definition of impairment or agreement as to how to accurately measure it. However, a carefully drafted and consistently executed drug and alcohol policy will reduce the impact of these uncertainties.
In this case, the applicant dismissed following a positive test result for Delta-9-tetrahydrocannabinol (THC) on the basis that he was impaired and therefore unfit for work or unable to perform his work safely. Whilst the Commission hesitated to weigh in on the impairment issue, they did find that there was a valid reason for dismissal because the applicant failed to disclose use of prescription medicinal cannabis containing THC.
However, the dismissal was nonetheless unfair because Commission opined that the non-disclosure was unintentional and the respondent failed to consider other options available under its applicable Alcohol and Other Drugs Policy.
In a rare occurrence, the actions of Australian Services Union in failing to assist with preparation for and representation at hearing were condemned.
The Commission did not hold back in criticising the ASU legal team and their decision to withdraw from representing the applicant in the proceedings, particularly as applicant was not literate and case had considerable merit. In what can only be described as expert level punnage, they described decision of ASU legal team to leave one of its members ‘high and dry’ as a disgrace – suggested ASU legal team ‘should perhaps reflect upon the reasons for its existence’.
WHAT DOES THIS MEAN FOR YOU?
- The impairment issue is still unsettled. Ensure that you have a robust drug and alcohol policy in place.
- The Commission unlocked expert level pun-making.
- Mills v Glamorgan Spring Bay Council [2025] FWC 116; BC202500293
