September 15, 2011by Israel Foulon LLP
Employment policies are not a novel concept. Companies of varying sizes have used them for years because effective policies work well. The purpose of this paper is to set out best practices used when designing employment policies. In Part One, we examine the best practices to be used when designing or revising existing employment policies and procedures. Part Two of this paper addresses how to avoid ambiguities in designing employment policies and procedures. In Part Three, we discuss what steps an employer may take to avoid the risk of non-compliance and ensure its policies are enforceable. Appendix “A” illustrates a typical workplace issue that, when a clear policy is implemented effectively, can be addressed in a way that is beneficial to an employer and employees.
DESIGNING Employment Policies
Properly drafted employment policies and procedures should be designed with the overall business strategy in mind in order to be effectively implemented. There are a number of ways in which the design of employment policies and procedures can help improve the workplace for both employers and employees.
How to Integrate Policies and Procedures into the Business Strategy?
1. Framework for Supervising Employees
Employment policies and procedures should provide a frame-work for how management supervises employee activities. Policies and procedures that are integrated into the business strategy should help managers in different offices be consistent in their management style by reducing arbitrary decision-making and discriminatory treatment of employees. Fair treatment by management will reinforce employee confidence in management decision-making, and will also encourage employee support of the policies.
2. Understanding Expectations
Effective policies and procedures should clearly set out what employers and employees expect from the employment relationship. It should establish the standard of behaviour required of employees, and spell out the consequences in the event an employee fails to meet this standard. The potential for conflict is diminished where parties are aware of their obligations and know how they are expected to perform in the workplace.
If a policy is applied consistently it may form part of the contractual terms which govern the employment relationship. When it is clear that the policy is enforceable, and that one party has breached its obligations under the policy, it is less likely that the validity of the policy will be challenged.
3. Effective Communication Tool
A policy manual is a vehicle for communicating information to employees. Policies can be used to inform employees about the organization, about the terms of the employment relationship, and about the variety of benefits and incentives available to employees. Policies can also inform employees how they can access these benefits. By including this information in a policy manual, employees with questions can refer first to the manual. The policy manual should reduce the amount of time management spends dealing with these questions.
4. Create a Team Atmosphere
In order to develop effective policies and procedures, the organization must support the project. But the project’s success also requires the support and commitment of management and employees. Management support for the policy manual is crucial for ensuring that the policies are actually applied. In order for a policy manual to be effective, employees must read the information and be encouraged to comply with the standards of behaviour and guidelines set-out in the policy manual.
Both groups should be advised and consulted throughout the process of designing or revising the policies and procedures. Management should be consulted as to what issues need to be addressed, and what policies the organization needs. Involving management in the preliminary planning and drafting of the document should encourage their participation in implementing the policies. Employers should also seek employee input. Employees’ firsthand knowledge about the organization’s day to day operations can be an important source of information at the drafting and revision stages.
Contents of Policies and Procedures
5. What You Should Include in the Policy Manual
There is no set model for a policy manual. Generally, a policy manual combines information about the organization, rules, standards of behaviour, terms of employment, and information about insurance and other benefits. To determine what should be included in your company policy manual, first assess the organization’s needs. In determining what policies and material should be included, the employer should consider the following factors:
(a) Who will receive a policy manual, and for what purposes? For example, will it be distributed to all employees? Do you plan to prepare different policy manuals for different segments of employees?
(b) The composition and occupations of the group who will be using the policy manual.
(c) How does the policy manual relate to other employment documents? Should these documents be included in the policy manual?
(d) The organization’s philosophy regarding employee relations, ie.
(e) The tone and impression the organization hopes to convey to management and employees.
(f) What the organization hopes to achieve by adopting and implementing the policies. For example, if the organization’s goal is to foster good employment relationships, it may want to include more pro-active policies which address employee relations issues. If its primary goal is to avoid litigation, the policies included in the policy manual should reflect those issues which are commonly the subject matter of law suits and statutory complaints.
6. Legal Considerations
There are a number of legal issues an employer should consider when compiling and drafting material for a policy manual. When drafting a policy manual, you should be aware of the relevant legislation and case law. The policies must be consistent with applicable employment standards legislation, human rights legislation, and other legislation governing the employment relationship. Where a policy is inconsistent with the applicable legislation, an employer may not be able to enforce it. For example, the court has held that in policies where notice provisions are less than those prescribed by the employment standards legislation, the policy is void.
Note that some provincial and federal legislation require that employers create certain policies. It is important to be aware of the relevant legislation, and to include these policies in the policy manual. Examples of legislation requiring such policies:
Bill 168, Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace)
Accessibility for Ontarians with Disabilities Act (Customer Service Policy Statement)
As discussed above, where the language of a policy is ambiguous, a court may construe this ambiguity against the employer.
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.
Once you have completed an initial draft, it is important that you have a lawyer review the policy manual. Any subsequent drafts and revisions should also be reviewed by a lawyer. You may also want to review the policies with the organization’s insurer.
7. Revising and Updating Policies
For employment policies to be effective long term, it is critical that you regularly review and revise the policy manual.
Policies and procedures should be reviewed at regular intervals to consider any existing or anticipated changes in the industry and in the workplace, new or impending legislation or changes in the case law, and any problems or issues employees and management may have experienced with implementing the policies and procedures.
Policies and procedures may also require revisions on an ad hoc basis. Where there have been changes in the legislation, a significant new case, or with organizational change, it is important that the policies and procedures be revised to respond to these changes.
How to avoid ambiguities
1. Writing the Policy Manual
Once you have researched, consulted, canvassed the law, and determined what material should be included in the policies and procedures manual, it is time to start writing. When you start writing, it is important to not forget the purpose of the exercise – to communicate your organization’s policies and procedures. This purpose should dictate your tone and style.
2. Style Considerations
The purpose of designing policies and procedures is to effectively communicate information to employees and management. The manual is useful only if it is easy to understand, it is easy to use, and if the information is communicated in a way which encourages management and employees to read it. The policy manual must be 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.
The language used should reflect the education levels and backgrounds of the workforce. A policy is not enforceable unless the employee has read and understood the policy. Therefore, it is in an organization’s best interests to ensure that its employees are able to read the policy manual.
How can you avoid ambiguity?
(a) Use simple language. Avoid using legal or technical jargon. If you must use a technical phrase or unusual word, try to define it using simple language.
(b) Communicate the information in small packages. Use short sentences. Paragraphs should focus on one idea. Use bullets and lists.
(c) Use bold headings and vary the font and text size to highlight important information and to separate different messages being communicated.
(d) Have employees and management review each draft. These are the people who will be using the policy manual. Do they understand what you are trying to say?
(e) Review! Edit! Proofread!
Consistent use of language helps to limit confusion. Be consistent in how you use specific terms. Always use the same term to express the same idea. For example, when referring to “full-time,” “part-time”, or “exempt employees” always use these same terms to refer to the same job status. It may be useful to include a definition section at the beginning of the policy manual. In the definition section, you should provide a detailed description of what the term will mean, as it is used throughout the policies and procedures documentation. Note that where terms have been defined, it is especially important to use the defined term consistently. When revising and adding policies, try to ensure that the language in the new policies is consistent with the language used in the existing documentation.
In addition to ensuring that you have used different terms and words consistently, it is important that the policies and procedures are consistent with other policies and material contained in the policy manual. As part of your review process, make sure that the policies and procedures do not contradict other material in the policy manual, or other employment documents. Where employment policies are contradictory and confusing, a court will be reluctant to uphold the policy.
Avoiding Ambiguity When Revising the Policy Manual
When revising the policy manual, the following is recommended:
(a) Revised and new policies and procedures should be incorporated into the policy manual, and out-dated policies and procedures should be 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 in order to eliminate any confusion as to which policies and procedures governed at any given time.
(d) Any revisions and new policies should be reviewed by a lawyer prior to being included in the policy manual.
COMPLIANCE AND ENFORCEABILITY
In order for the policies and procedures to be enforceable, they must form part of the employment contract, the policies must be applied consistently, they must have been read and understood by employees 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 manual forms part of the employment contract, it will be difficult for an employer to enforce or to rely upon these terms. While ultimately, it may be a court who decides which terms govern the employment relationship, employers can take a number of steps to protect their position:
(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.
The material included in the policy manual should be accessible and easy to use. Management and employees should be able to locate the information quickly. An employer must assess its workplace and determine which format would best ensure that the information is accessible, and will be used. In determining what format to use, the employer should consider the following factors:
(a) How many employees will receive a copy of the policy manual. If you must provide manuals to a large number of employees, you may want to adopt a less expensive format.
(b) The organization’s level of turnover. If you have a high level of turnover, you may not want to distribute a policy manual that will be costly to continue replacing.
(c) The nature of your workplace. Is it highly computerized? Is it a multi-lingual working environment?
(d) How often do you anticipate that the policies will need to be updated and/or revised?
Depending upon the type of workplace, and the available resources, there are a variety of formats which may used. Three of the most common formats include compiling the policies in a loose-leaf binder; publishing a bound policy manual; or communicating the policies via the company computer system. There are advantages and disadvantages to each format.
3. Steps To Take When Revising Your Policy Manual
As discussed in Part One, policy manuals should be revised, updated and supplemented. By revising an existing policy manual, an employer is revising or changing the terms of the employment relationship. Changes to the terms of employment gives rise to a number of issues.
Generally, courts are reluctant to enforce contractual terms which the employer has imposed unilaterally. 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. When preparing to make changes, employers should advise and consult with employees about the proposed changes, and seek their 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.
When making revisions or additions to the policy manual, employers should confirm that the changes are “legal.” A lawyer should review the changes, to ensure that they comply with the existing legislation and case law. The court is unlikely to enforce a policy which is inconsistent with the applicable employment law and human rights legislation. Furthermore, a lawyer will be able to assess whether the changes are reasonable. In the past, the court has been reluctant to enforce what it perceived to be an unreasonable revision of the terms of employment. Unreasonable changes to the policy manual may create additional problems for an employer. In some cases, unreasonable changes to the employment contract may be held to constitute constructive dismissal.
The effectiveness of an employment policy depends on how well it is implemented. In order for a policy to be enforceable, and for a an organization to be able to rely upon its policies in the event of a law suit, it is important that management are aware of the policies, and trained in how to apply the policies. In addition to training, the policies themselves can be used to provide direction to management as to how to best implement the policy. For example, certain policies could include a section of instructions — a memo to management. The “management memo” could advise management as to how to best implement the policy.
5. 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 implementing 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. As discussed in Part Two, policies may include a “management memo” which should instruct management on how to best implement the policy.
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.
Let me illustrate by focussing on a regularly re-occurring problem area.
Whether out of fear of legal repercussions or ignorance, many employers are paralysed when it comes to poor performance or attitudinal problems of employees. Based on more than 20 years of advising management in this field, I’d like to suggest an approach to taking corrective action that when consistently communicated by way of written policies and verbal discussions and consistently applied can become a win-win situation for employer and employee alike.
Here are the main elements of a sound performance management policy programme. The following steps should be taken in drafting such a policy:
1. Senior management, with input from line management should analyze each job and create a job description. Such job description should outline the main functions expected from each employee as well as provide management with some general rights to amend the job description from time to time as business requirements may dictate.
2. The job descriptions should be discussed with each employee on an individual basis. The employee must be advised of the expected duties and the level of expectation required to successfully perform them. Industrial psychologists have consistently shown that employees with input into workplace issues and their positions tend to be more motivated and more productive. They often also have good ideas and a better understanding of how the work is actually completed. Employees are also much more likely to buy into the system if they have had input into it.
3. Job descriptions would be reviewed yearly, at which time goals would be set for the new year and deficiencies of the previous year would be discussed. This would be quite aside from any other performance appraisals during any particular year.
4. The employer should clearly communicate acceptable standards of conduct as well as the consequences of such conduct. I usually separate unacceptable conduct into two categories. Category 1 will result in immediate dismissal for cause, and category 2 will result in disciplinary action and performance improvement plans up to and including termination of employment.
Category 1 may include:
(a) knowingly falsifying employer records;
(b) physical violence towards a fellow employee or customer;
(c) theft without colour of right;
(d) unauthorized possession of company property or drugs or weapons;
(e) knowingly disclosing trade secrets or confidential information to a competitor;
(f) conflict of interest.
Category 2 may include:
(a) insubordination, ie., refusing to follow a supervisor’s reasonable directions;
(b) being under the influence of alcohol or drugs in the workplace;
(c) repetitive performance or attitudinal issues;
5. The policy must include a description of the various steps which may be taken as part of the corrective action policy. Many employers use the following:
Suspension, with or without pay (note: the employer must have a clear suspension with and without pay policy in its policy manual, which must be shared with the employee prior to the employee commencing employment because, otherwise a suspension with or without pay may be seen by the courts as constructive dismissal)
Many employers have additional steps in the process. Management’s right in its sole and absolute discretion to deviate from the steps where it deems necessary, must be included in the policy.
6. Having clearly defined expectations as well as the corrective steps, managers must monitor employee performance. Managers should keep records of any concerns, achievements, or commendations.
7. Good performance ought to be recognized and poor performance dealt with in a timely and constructive fashion. Remember, the goal is to correct the problem, not to punish the employee. With honest communication, it will become quite quickly obvious whether the employee is prepared to meet the challenges and improve his or her performance or whether further corrective action is necessary.
8. After such initial discussion, the manager should continue to monitor the employee’s performance. If similar problems arise, they should be documented properly. For example, if one of the issues raised in the first meeting was frequent spelling errors, copies of documents showing subsequent errors should be kept. Similarly, if management continues to receive customer complaints after a first meeting, details of the complaints should be recorded. Such documents will be shown to the employee in later meetings to demonstrate the continued difficulties.
9. In the next meeting, the examples of specific deficiencies will be discussed and management together with the employee will be able to devise a corrective action plan for the employee. Such corrective action plan will address the performance or attitudinal issues, and will specifically advise the employee of realistic expectations within a particular time frame. The employee should be given an opportunity to add any further comments to the form and should sign this document. Management should set up a specific date for a follow up meeting. The form should advise the employee that if any further issues arise before the specified meeting, management has the right to review the further developments with the employee immediately and to take whatever steps it deems necessary.
10. The above described form serves many purposes. It is a written record of the events, provides a precedent for similar circumstances in the future and will permit a consistent approach to similar problems with this and other employees. Such consistency will greatly assist an employer position should a law suit or complaint arise. Just as importantly, the remaining employees will more likely accept that the employer has acted fairly and consistently in the circumstances.
11. Managers must receive active education and training in monitoring such plans. Too often managers shy away from difficult situations and ignore an employee while he or she flounders. This reaction misleads the employee into believing that they have accomplished the goals outlined in the corrective action plan. If time passes without management comment regarding the same or other performance issues, the employee may conclude that they have successfully completed the corrective action program and a court would find that the employer has condoned the problem.
12. If the employee successfully completes the corrective action plan, such success should be confirmed in writing. In the confirmation note, the employee should be advised that the company expects them to continue at the same level of performance and that should the employee fail to maintain this level of expectation, management reserves the right to deal with any further difficulties at any stage of the corrective action process. The employee should be advised that such corrective action plan will remain in his or her personnel file for a specified period of time, ie., two years.
13. If the difficulties continue, the employee should be provided with a final written warning. This warning may be issued during the corrective action plan time frame in reaction to a specific event or at the end of the corrective action plan in the final review if the employee has not been successful. If the latter is applicable, management should ensure that this warning is issued before the corrective action plan expires. The warning should be in writing and should advise the employee of the steps management has taken to assist the employee in correcting his or her deficiencies. In very clear language, the employee should be advised of exactly what he or she must achieve or what he or she must not do within a very short time period, ie., two to three weeks. The employee should be further advised that failure to achieve these goals will result in his or her immediate dismissal for cause. Managers must include this type of language in the document for it to be seen by a court as a final warning that his or her employment is in jeopardy.
14. If the employee does not meet management’s expectation during the final time line, despite the final warning, management would be in the position and should terminate the employee for just cause.
Assuming all of the above steps have been followed and that the policies are reasonable and consistently enforced, the employer may be able to avoid any common law liability. However, as all employers know, upon termination, an employee is entitled to termination pay and possibly severance pay according to Employment Standards legislation in our provinces. In Ontario, the employee is not entitled to those payments only if they are guilty of “willful misconduct or disobedience or willful neglect of duty that has not been condoned by the employer”. Traditionally, the Employment Standards Branch in Ontario had not found performance or attitudinal deficiencies to fall into either of these two categories. Therefore, if the employer is relying on these types of causes, the Branch may order the employer to pay Employment Standards obligations.
The above, in my experience, creates a “win – win situation” for the employer. By following the above described system, you will either have a well trained, productive and motivated employee or would have separated from an employee who was not willing or able to perform under your system, while substantially reducing your risk of being successfully attacked by such employee whether by way of common law action or other administrative complaint.
The reason being, that you, as an employer, will be in a far better position to advise a court, administrative body or the employee’s solicitor that:
(a) there was a clear policy in place;
(b) the employee knew what was expected;
(c) the employee was advised orally and in writing, of his/her deficiencies;
(d) specific examples, guidelines and goals were provided to the employee to assist in his/her rehabilitation;
(e) the employee did not address the issues;
(f) the employee received a final warning that his/her job was in jeopardy; and
(g) the employee continued to ignore or not meet the stated expectations.
*The author gratefully acknowledges the assistance of Andrea Stoddart in the preparation of this material.