Q&A - Should contracts of employment include company policies and procedures?

Q: I run a newly formed but very successful digital design agency. At the moment my staff only have basic contracts of employment and I want to introduce revised contracts to protect my business. I am, however, unsure how to deal with my grievance and disciplinary policies. Do these have to go in the contract?

A: Company policies and procedures are best kept separate from the contract of employment. There should normally be a clause within the contract of employment which expressly states that the policies and procedures do not form part of the contract and that they can be varied as you deem appropriate.

The reason for keeping them separate is that if a certain policy or procedure is contractually binding then, strictly speaking, you will need each and every employee to agree to any variation. More importantly, if you do not follow the policy or procedure in question then this may amount to a breach of contract. Depending on the extent of the breach, the employee may be able to claim a constructive dismissal and if they have sufficient continuity of service, they may also be able to bring a claim for unfair dismissal. 

It is important to understand that even if the contract says that policies and procedures are not contractually binding, the Court or Tribunal has discretion to examine the way in which they are actually dealt with in practice and decide whether they are in fact binding. 

Regardless of whether a policy or procedure is binding, it is good practice to always follow them unless there is good reason not to. We would also recommend that all staff affected by a particular policy or procedure (in particular managers) are properly trained so that they know what is expected. If in doubt you should contact an employment law specialist for further advice.

(Published 16/10/2017)