The deceit of the pol­i­cy manual

Those are my prin­ci­ples, and if you don’t like them… well, I have oth­ers.” — Grou­cho Marx

As an HR pro­fes­sion­al, you val­ue your integri­ty, right? With­out that, your cred­i­bil­i­ty with staff dis­ap­pears. A core aspect of integri­ty is hon­esty — if your word can­not be relied upon, then you lose the trust of staff.

But here’s the prob­lem, as an employ­ee of the com­pa­ny (par­tic­u­lar­ly if you are a senior man­ag­er), your pri­ma­ry alle­giance is to the com­pa­ny. This can lead to some tricky sit­u­a­tions, because plain­ly, the inter­ests of the com­pa­ny and indi­vid­ual staff mem­bers do not always align.

One area where this becomes appar­ent is in the pro­lif­er­a­tion of employ­ee poli­cies and pro­ce­dures with­in a work­place. These doc­u­ments are expand­ing expo­nen­tial­ly. They often impose a raft of oblig­a­tions on employ­ees and also describe ben­e­fits avail­able. They may cov­er pro­mo­tion pro­ce­dures, what parental leave pay­ments will be made, the well­ness pro­gram, approach­es to flex­i­ble work­ing arrange­ments and even the dis­cre­tionary bonus scheme… 

So the ques­tion is: Can employ­ee poli­cies and pro­ce­dures be relied on by employees?

The answer to this ques­tion must sure­ly affect how you describe the poli­cies and pro­ce­dures and their effect when pre­sent­ing these doc­u­ments at induc­tion (or oth­er­wise), if you want to main­tain your cred­i­bil­i­ty with staff. You may cur­rent­ly be induct­ing new staff into these poli­cies and pro­ce­dures (some­times even requir­ing writ­ten acknowl­edge­ment by the employ­ee), per­haps pre­sent­ing them as infal­li­ble doc­u­ments against which the employ­ee will be held account­able and upon which they can rely. 

And yet the help­ful answer as to whether employ­ees can rely on them, com­ing from appel­late courts in Aus­tralian this year, is (drum roll) – per­haps Yes, per­haps No, or Not nec­es­sar­i­ly.

Per­haps No

In recent judge­ments, the courts have held that, at the heart of the nature of a pol­i­cy doc­u­ment, is the employ­er’s right (rou­tine­ly exer­cised) to alter these poli­cies and pro­ce­dures at any time to suit their oper­a­tions — with­out the con­sent of employ­ees. And this implied right applies equal­ly to poli­cies which relate to ben­e­fits and on which an employ­ee may seek to rely, as well as those which impose oblig­a­tions. Not so good for the employ­ee – or for your cred­i­bil­i­ty if you had indi­cat­ed oth­er­wise.

Per­haps Yes

When it comes to the law, there is always an excep­tion – and in this case the courts have real­ly mud­died the waters. In a series of cas­es (River­wood Inter­na­tion­al v McCormick, Gold­man Sachs JBWere v Nikolich and Romero v Farstad Shipping[1]), the courts decid­ed (based on the con­tents of the par­tic­u­lar employ­ment con­tracts — the terms of which were unre­mark­able) that at least some of the employ­ee pol­i­cy and pro­ce­dure doc­u­ments were con­trac­tu­al and, there­fore, could not lat­er be altered by the employ­er with­out the indi­vid­ual employ­ee’s consent.

This approach is good for the employ­ee and pro­tects your cred­i­bil­i­ty (as the HR man­ag­er) from being under­mined by uni­lat­er­al changes being made by the employ­er to the poli­cies and pro­ce­dure doc­u­ments you explained at length.

But Not Necessarily

Yet, very recent­ly this year, based on terms in employ­ment con­tracts that looked sus­pi­cious­ly sim­i­lar to the terms con­sid­ered by the dif­fer­ent Full Fed­er­al Courts in River­wood etc, the NSW Court of Appeal and the Full Fed­er­al Court have come to a dif­fer­ent view. In McK­ei­th v RBS Group and West­pac v Wittenberg[2], they held that the poli­cies and pro­ce­dures were not con­trac­tu­al and, there­fore, could be changed by the employ­er with­out the need to con­sult staff.

So, what should an HR pro­fes­sion­al do? 

Can you say with con­fi­dence that the ben­e­fits out­lined as avail­able to staff in the poli­cies and pro­ce­dures man­u­al can be relied on to be avail­able in 3, 5 and even 10 years? It’s an impor­tant ques­tion because it goes to the heart of the trust rela­tion­ship between you and your staff. 

We like to think that our word is our bond’. How­ev­er, whether you can make promis­es to inter­vie­wees or staff about ben­e­fits avail­able under your com­pa­ny’s employ­ment pol­i­cy and pro­ce­dure man­u­al will often depend on your com­pa­ny’s gen­er­al coun­sel or exter­nal lawyers’ opin­ion on the mat­ter. Do they con­sid­er that the com­pa­ny’s employ­ment pol­i­cy and pro­ce­dure man­u­al can be changed on a whim by the com­pa­ny? Frankly, they will often not even know them­selves. Who can blame them when var­i­ous con­sti­tut­ed Full Fed­er­al Courts seem to make it in con­flict with itself? 

There is a sharp­er edge to this for you as a HR pro­fes­sion­al. Under the Com­pe­ti­tion and Con­sumer Act, you can be per­son­al­ly liable to a penal­ty if you are found to have:

”… in rela­tion to employ­ment that is to be, or may be, offered by the per­son or by anoth­er per­son, engage[d] in con­duct that is liable to mis­lead per­sons seek­ing the employ­ment as to:

  • the avail­abil­i­ty, nature, terms or con­di­tions of the employ­ment; or 
  • any oth­er mat­ter relat­ing to the employment.”

So, if you present the com­pa­ny’s employ­ment pol­i­cy and pro­ce­dure man­u­al to staff and it con­tains offers of gen­er­ous redun­dan­cy schemes or advan­ta­geous met­rics for the dis­cre­tionary bonus scheme, and your com­pa­ny sub­se­quent­ly retracts or dimin­ish­es those ben­e­fits with­out an employ­ee’s con­sent, you can be left exposed.

Yet, ulti­mate­ly, the quandary it pos­es for you as an HR pro­fes­sion­al is as much an eth­i­cal one as a legal one. 

When a ben­e­fit pre­vi­ous­ly afford­ed under a pol­i­cy and pro­ce­dure dis­ap­pears, how does that sit with you as a per­son who val­ues honesty? 

The assur­ances of your cur­rent MD or Group HR Exec­u­tive are of no val­ue, because they could be gone in 2 years. The new man­age­ment team para­chut­ed in by ven­ture cap­i­tal­ists who have since pur­chased a size­able hold­ing in the com­pa­ny, may have a very dif­fer­ent approach to hon­our­ing these commitments:

Unless it’s in a con­tract, no one has to be respon­si­ble for it – really’.

So, be care­ful how you sell’ those staff ben­e­fits on offer by the com­pa­ny but that sit out­side the employ­ee’s con­tract of employ­ment. Pep­per your descrip­tion of the ben­e­fits with the words cur­rent­ly’, at the moment’ and even may be sub­ject to change’. Often, the com­pa­ny’s employ­ment pol­i­cy and pro­ce­dure man­u­al will con­tain state­ments that its con­tents may be changed with­out agree­ment or even con­sul­ta­tion with the staff – per­haps point this out.

Your cred­i­bil­i­ty is tied irrev­o­ca­bly with your name. Pro­tect it from being under­mined by those you are seek­ing to serve, because, adapt­ing the words of Arthur Miller’s trag­ic pro­tag­o­nist, John Proc­tor, in the icon­ic play The Crucible’:

It is your name and you shall have no other!’