Ever since the decision of the Federal Court in Goldman Sachs JBWere Services Pty Limited v Nikolich [2007] FCFCA 120, employers have had to think very carefully about incorporating workplace policies and procedures into their employment contracts. If your policies and procedures are incorporated into your employment contracts, your employees can sue you for breach of contract if you fail to comply with your own policies and procedures.
This issue was recently considered by the NSW Court of Appeal in McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 36 (McKeith), in which the court held that the employer’s redundancy policy was not incorporated into an executive’s employment contract.
Why was the policy held not to have been incorporated into the contract?
Tobias AJA held that a clause stipulating that the employee ‘agreed to be bound’ by workplace policies ‘as may exist from time to time’ did not incorporate the redundancy policy into the employment contract. In so doing, his Honour relied on the fact that the policy was not readily available to the employee when the contract of employment was signed, and that provisions covering redundancy payments are not the sorts of provisions that are ordinarily included in employment contracts.
Lessons for employers from McKeith
Tobias AJA made clear that the question of whether a policy has been incorporated into a contract will depend on the particular facts of each case. Each of the cases relied on by Mr McKeith in support of his entitlements under the policy turned on their own facts, and did not support a general rule or proposition.
In each case, much will depend on:
- The time at which the employee was given access to the relevant policy;
- The physical location of the relevant policy;
- The subject matter of the relevant policy;
- The language of the relevant policy; and
- The terms of the contract of employment.
In our view, the safest course for employers to follow is to make sure that every employment contract contains a clear statement that workplace policies do not form part of the contract. This saves the time and stress associated with complex fact-specific disputes of the kind that arose in McKeith.
How can JFM Law help?
If you have any doubt as to whether you should or should not incorporate your policies in your employment contracts, contact JFM Law on (02) 9199 8597 for a no obligation chat or email us.
The information contained in this post is current at the date of editing – 04 September 2025.
