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When may awards, enterprise agreements and policies form part of an employment contract?

In Vision Australia v Elisha (2023), the Victorian Court of Appeal has clarified that, in certain circumstances, awards, enterprise agreements and employer policies may form part of an employment contract.

The case concerned an employment contract containing the following provisions: “Your engagement will be governed by the terms of this letter and the Community Employment, Training and Support Services Award 1999 … In addition, Employment Conditions will be in accordance with regulatory requirements and Vision Australia Policies and Procedures. Breach of the Policies and Procedures may result in disciplinary action.”

The Court ruled the fact the contract provided that the employee’s engagement was "governed by" a relevant award did not incorporate the award into the contract.

The Court also determined that the general reference to “regulatory requirements” was too vague to form part of the contract. However, it held that the specific reference to the employer's policies and procedures, including the disciplinary procedure, properly incorporated these documents into the contract. The Court arrived at this conclusion having regard to the fact that:

  • the contract regulated employee conduct, and unsatisfactory conduct would be responded to in accordance with the disciplinary procedure;
  • the letter of offer made express provision that the employment relationship could be impacted by a policy or procedure;
  • a reasonable person would understand it to be unnecessarily cumbersome for all policies and procedures to be enclosed with the letter; and
  • the disciplinary procedure contained express assurances and promises that the employer would act in a certain way.

Having found the disciplinary procedure was part of the contract, the Court examined whether damages for psychiatric illness flowing from the employer’s failure to put allegations to the employee during the disciplinary hearing could be claimed as a breach of contract. In this respect, the Court ruled the parties would not have reasonably contemplated that psychological or psychiatric injury might be the result if there was a failure to comply with such procedures. Therefore, no damages were awarded.

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