Should we include policies and procedures in our contracts of employment?

The contract of employment is the fundamental document governing the contractual employment relationship between an employer and an employee.

However, it is usually not the only document governing the relationship. Employers often have an employee handbook which includes work practices as well as policies and procedures.

The most important policies and procedures should cover the following:-

• Grievances
• Disciplinary issues
• Bullying and Harassment (Dignity at Work)
• Health and Safety
• Whistleblowing

Given the importance of these policies and procedures, should they be incorporated in the contract of employment? In our view, they should not.

Most commonly, the contract of employment refers to the above policies and procedures and where they can be found.

In some cases, the contract of employment goes on to state that the policies and procedures “form part of the terms and conditions of the employee’s employment”. Such a clause is not advisable for the following reasons:-

1. Changing any contractual term will require employee consent. If the policies and procedures form part of the employees’ contracts, each employee will need to consent to the change of the policy or procedure. This will not be practical for employers where they need to update such policies or procedures.
2. While incorporating policies and procedures into the contract of employment means that the employee is contractually bound to follow those policies and procedures, so too is the employer. An employer would be leaving itself open to a claim breach of contract for any minor breach of the procedures.

Rather than incorporating the policies and procedures into the contract of employment, employers should consider:-

• referring to the policies and procedures and where they can be found; and
• confirming that they do not form part of the employee’s contract of employment.

An example of a clause in respect of a Disciplinary Procedure would be:-
“Full details of the Company’s Disciplinary Procedure are contained in the employee handbook, [which accompanies this agreement]. These procedures do not form part of your contract of employment. The Disciplinary Procedure does not apply during the probationary period or any extension thereof.”

The employee should be required to sign a letter confirming that he or she has read and understands the employee handbook and a copy of that letter should be kept on the employee’s personnel file.

The employer should also consider including a clause in the contract of employment which provides that “where there is a conflict between your contract of employment and the employee handbook the terms of the contract of employment shall prevail.”

For further information on this topic, please contact Laura Graham at lgraham@reddycharlton.ie