September 14, 2010
by Israel Foulon LLP

INTRODUCTION

Employment policies can contribute to a positive work environment and a productive workplace. They are an essential management tool which enjoy a long history in the business world. The simple reason for this – effective policies work well. However, this begs the question: how does an employer establish enforceable employment policies? This paper will address how a company may develop and/or revise its employment policies and policy manual, as well as what steps an employer may take to ensure that its policies are both enforceable and effective.

CREATING and implementing EFFECTIVE Employment Policies

Employment policies can address a wide range of topics and issues that can arise in the workplace. While the specific policies put into place by a particular organization will vary from business to business, generally a workplace policy manual will include information about the company, rules, standards of behaviour, terms of employment, and information about insurance and other benefits.

When creating employment policies, it is important that they are clear and concise. Clarity is important for two reasons. First, it is important that the reader understands exactly what you are trying to say. A policy manual is not effective if management and employees are confused by the information. Second, if the policy language is ambiguous, a court is more likely to interpret the policy in a manner which will favour the employee. Consistent use of language is essential as it helps to limit confusion. Policies should be consistent in the use of specific terms, always using the same term to express the same idea. Each workplace policy should also be consistent with other policies and material contained in a policy manual or employee handbook. Different policies should not contradict each other or other employment documents. Where employment policies are contradictory and confusing, a court will be reluctant to uphold the policy.

Policies must also be consistent with applicable employment standards legislation, human rights legislation, occupational health and safety legislation, and other legislation governing the employment relationship. Where a policy is inconsistent with the applicable legislation, an employer will generally not be able to enforce it. For example, any policies which would fall below applicable employment standards legislation or be in violation of applicable human rights legislation, would be unenforceable. On the other hand, some provincial and federal legislation requires employers to enact certain policies. For example, the recent enactment of Bill 168 in Ontario, the Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace), 2009 which came into force on June 15, 2010, requires that employers enact policies and programs to prevent and address incidents of workplace violence and harassment. Therefore, it is important to be aware of the relevant legislation, and to include these policies in the policy manual.
When drafting employment policies, the employer should always expressly reserve the right to revise, rescind or amend the policy. Although an employer’s ability to unilaterally modify the policy may be limited by other considerations, it is still important to reserve this flexibility.

For employment policies to be effective long term, it is critical that employers regularly review and revise their policy manual. When revising the policy manual or employee handbook, employers should consider the following issues:

a) It is important that revised and new policies are incorporated into the policy manual, and outdated policies are discarded.
b) Employers should ensure that management and employees have read and understand the new policies.
c) When a policy has been revised, or a new policy is introduced, it is important to date the new policy. The date, and where applicable, the effective date of the revision, should be recorded in a header or footer on the policy itself. By dating policies, the organization can eliminate any confusion as to which policies governed at any given time.
d) Any revisions and new policies should comply with the relevant legislation and current case law.
e) Employers should exercise caution when revising existing and adding new policies to the policy manual. Employers may modify policies in an effort to change the terms of the employment contract. As discussed in the next section, there is some risk that the new policies will not be enforceable.
f) Receipt of any revisions or new policies should be acknowledged by the employees in writing.

Enforcing Employment Policies

It is not enough to create an employment policy manual that people will read, people will understand, and people will use. While there may be many reasons why an organization decides to draft and implement employment policies, one goal is to avoid or reduce the possibility of litigation. Organizations who invest the time and money into creating a policy manual want policies that work, policies they can enforce, and policies they can use to support their position in a law suit, administrative complaint or charge. In order for a policy manual to be enforceable, it must form part of the employment contract, the policies must be applied consistently, and the policies must comply with current legislation and case law.

1. Policy Manual Should Form Part of the Employment Contract

Policy manuals often set out the terms of the employment relationship. Unless the policy manual forms part of the employment contract, it will be difficult for an employer to enforce or to rely upon these terms. Thus, if the terms of a policy manual are to be binding, it must be concluded that they have contractual force.

For a policy manual to form a part of the employment contract, the usual elements of a contract must be established: a concluded agreement, consideration and contractual intention. In particular, an employer seeking to rely on a policy manual must take reasonable steps to draw the terms of the policy to the attention of the employee, and there must be an “outward manifestation of assent of common intention” by both the employer and the employee. This communication of assent is usually indicated in writing by the employee’s signature by way of an acknowledgement and acceptance of the terms of the policy. However, it may be found in the form of the conduct of the employer and employee.
The conduct of the employer and employee subsequent to the making or during the implementation of the policy, may be used as a guide to interpreting its terms. The court may look at the employer’s and employee’s reliance on the policy manual to determine if the policy manual is a contractual document. In other words, did the conduct and practice of the employer and employee show an intention to be bound by the terms of the policy? If so, the terms of the policy may be bound to be contractually binding. The onus will fall on the employer seeking to rely on the terms of the policy to establish that it does form part of the employment contract. Communication of assent to the policy cannot be inferred from the fact that the employee continued to work after being given the policy.

Thus, in order to try and ensure that employment policies form part of the employment contact, employers should take the following steps:

(a) The policy manual must be made a part of the employment relationship from the outset. During recruitment, the employer should advise candidates that, in addition to the actual employment contract, the policy manual also contains terms which will govern the employment relationship.

(b) The employment contract should expressly refer to the policy manual. The contract should contain language which confirms that the employee is bound both by the terms of the employment contract and by the policies included in the policy manual.

(c) Employers should provide each employee with a copy of the policy manual, and request that employees read the manual and agree to its terms. Employees should sign an acknowledgement that they have read and fully understood the material contained in the policy manual, and that they understand that they are bound by these policies.

2. Steps To Take When Revising Your Policy Manual

As stated previously, policy manuals should be revised, updated and supplemented. However, by revising an existing policy manual, an employer is revising or changing the terms of the employment relationship. Changes to the terms of employment may give rise to a number of issues.

Generally, courts are reluctant to enforce contractual terms which the employer has imposed unilaterally without notice. Absent negotiations between the parties, and employee consent to the changes, a court may not allow employers to rely upon the new terms. Like any other changes in the terms of the employment contract, an employer should not unilaterally introduce new policies, or revise existing policies without first providing notice to the employee where they would constitute a fundamental change to the terms and conditions of employment. Where possible employers should obtain their employees’ agreement to the new terms. Employers should require employees to read and sign the revised policy, and retain a copy as a record of the employee’s consent to the changes.

3. Policies Must Be Applied Consistently

Employment policies are not effective if they are not followed. The success of any policy manual is subject to having a management team who is aware of the material, and who knows how to properly and consistently apply each policy. Employers should consult with management to develop appropriate procedures for applying and enforcing policies. Management should be trained in these procedures. Procedures should be reviewed periodically, to assess whether the policies are being applied consistently by all management. Employees must also be encouraged to buy into the project. In order for a policy manual to be an effective communication tool, employees must read the information. If employees are unaware of the policies, and/or choose not to comply with the standards of behaviour and guidelines set-out in the policy manual, the policies will be ineffective from a practical standpoint.

If a policy exists, but has not been applied, the employer’s investment of time and money in developing that policy is wasted. In addition to wasted resources, an employer’s failure to follow its own policy may be held against it in court. For example, where an employer fails to consistently apply its own policies with respect to corrective action and discipline, a court may prohibit the organization from relying upon this policy to defend itself in a wrongful dismissal action.

CONCLUSION

If employment policies are reasonable, have been properly implemented and consistently enforced, an employer may be able to rely upon them in legal proceedings. This will allow an employer to substantially reduce its risk of being successfully attacked by an employee, whether by way of common law action or other administrative complaint. It should also result in an improved workplace for both employers and employees. Good employment policies should reduce workplace conflict, increase morale and productivity, and contribute to better employment relations.

Carita Pereira is a Partner of Israel Foulon LLP, a leading employment and labour law firm in Toronto. Carita can be reached at 416.640.1550 extn. 224 or caritapereira@qtw38575.mywhc.ca.