Australia: HR Policies That Promise Too Much

Last Updated: 1 November 2007
Article by Peter Punch and do not use

An employer’s human resources policies are not just a set of statements that no-one takes seriously … they can be enforceable contract terms, according to the Federal Court.

The Full Federal Court of Australia has recently handed down its judgment in relation to the appeal against the landmark decision of Justice Wilcox in Nikolich v Goldman Sachs J B Were Services Pty Ltd [2006] FCA 784. By a majority (2:1), the Full Federal Court upheld the orders made by Justice Wilcox at first instance, with the exception of orders as to costs.


Mr Peter Nikolich accepted an offer of employment with Goldman Sachs J B Were Services Pty Ltd ("the Company") as an Associate Investment Adviser in May 2000. Prior to Mr Nikolich’s acceptance of the offer, the Company provided Mr Nikolich with a number of documents including a document titled ‘Working With Us’ ("WWU"), which was a significant document (119 pages) that covered many topics, such as employee health and safety, harassment and conflicts of interest.

A dispute arose between Mr Nikolich and his direct supervisor approximately 3 years after he commenced employment with the Company, which led to Mr Nikolich making a formal complaint to the Company’s Human Resources section in July 2003. An investigation was subsequently commenced, but it was not concluded until December 2003. During this period (approximately 5 months) the relationship between Mr Nikolich and his supervisor deteriorated rapidly, Mr Nikolich became extremely distressed and went on to develop a depressive disorder. Due to his illness, Mr Nikolich was absent from work for an extended period of time, and this resulted in his employment being terminated by the Company.

The decision at first instance

Mr Nikolich brought a case in the Federal Court where he alleged the following:

  • That his employer had unlawfully terminated his employment in breach of section 170CK of the Workplace Relations Act 1996 (Cth);
  • That his employer had breached his contract of employment;
  • That his employer had engaged in misleading and deceptive conduct.

Mr Nikolich was ultimately only successful in relation to the second claim, in relation to which it was found that: (1) certain terms within the WWU document formed part of his contract of employment; (2) the Company breached those terms including by not urgently investigating the matter and resolving the dispute and by not ending the supervision of Mr Nikolich sooner; and (3) Mr Nikolich had suffered psychiatric injury as a result of that breach.

The relevant terms of the WWU that were held to have been breached were:

  • Health and safety: the Company "… will take every practicable step to provide and maintain a safe and healthy work environment for all people";
  • Harassment: "… all people within the JBWere team will work together to prevent any unwelcome, uninvited and unwanted conduct";
  • Grievance procedures: the Company is "… committed to make sure that anyone who makes a genuine complaint will be able to discuss his concern confidentially, will be supported by the firm and is not penalised in any way".

The Court awarded Mr Nikolich damages for past and future loss of earnings, as well as general damages and his legal costs.

The Appeal

The Company appealed the decision at first instance to the Full Federal Court. Chief Justice Black and Justice Marshall dismissed the appeal, except in relation to costs, and upheld the decision at first instance. All members of the Full Bench disagreed with Justice Wilcox’s findings that the terms in the WWU relating to Harassment and Grievance procedures formed part of the contract of employment. However, all judges were satisfied that the term relating to Health and safety in the WWU document formed part of the contract of employment.

Their Honours reasons in support of this conclusion were mainly these:

  • Mr Nikolich had been provided with a copy of the WWU when he was first offered employment, and prior to signing the letter of offer which referred to "office memoranda and instructions" that would be issued by the Company;
  • Mr Nikolich had been required to read the WWU document and sign some forms contained within it, including an acknowledgment relating to the Company’s Health and Safety Statement;
  • The term relating to Health and safety was expressed in promissory language (i.e. the language of contract), whereas other terms were expressed in the language of advice or direction;
  • Employment contracts that do not have an express term regarding health and safety have an implied term that the employer will take reasonable care to provide a safe place of work and a safe system of work.

The last reason may limit the application of this decision in the future, as the Court noted that the term in the WWU merely extended the common law duty higher, but not significantly higher. The Court did not have to decide whether the common law duty would have been breached in the absence of the express term in the WWU. It was also noted by Justice Marshall that the fact that the WWU document contained an express term by which the Company reserved its right to change the information contained within the WWU from time to time, does not mean that the Company did not intend to be bound by it. Also, the fact that the Company had required Mr Nikolich to sign forms acknowledging certain provisions of the WWU document, did not mean that it was not the parties’ intention for other provisions of the WWU document to form part of the contract of employment.

What this means for your business

There is now a Full Federal Court ruling that a contract of employment may be found to have incorporated provisions contained within other documents (i.e. such as employee handbooks and other human resources documents), and if so, the employer and employee will be bound by those provisions. The same Court has already found a company was bound by its human resources policies to pay an employee a redundancy even though there was no term in his written contract of employment.

The significance of this recent Full Federal Court decision should not be taken lightly, as one can easily contemplate a matter arising where a similar provision relating to health and safety is regarded as incorporated into a contract of employment, and an employee is seriously injured at work. The employee may then have a number of potentials claims against the employer under personal injury laws, as well as a claim for breach of contract. There is of course also the potential for the employer to be prosecuted by state or federal authorities for contravention of occupational health and safety law(s).

Accordingly, employers should carefully (and regularly) review the wording used in their employment contracts and other employment or policy documents, particularly documents relating to harassment, grievance handling procedures, and health and safety matters. This of course may include documents that are stored electronically which are accessed by an employer’s intranet. It is critical that a line be drawn between obligations which an employer wishes to be contractual as distinct from merely "aspirational" and this involves careful drafting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions