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Introducing policy breached employment contract

​The New South Wales Supreme Court has ordered an employer to pay over $50,000 to a former employee, finding that the employer could not unilaterally vary a contractual entitlement to receive commissions by introduction of a policy.

A recruitment consultant entered into an employment contract which contained an entitlement to receive commissions. The contract also required him to comply with the company’s policies and guidelines. Months after the contract was signed, the company created a Policy and Procedures Manual, which stated employees would not receive commissions in their “final pay” if their invoices had not been settled prior to their departure. The employee ceased employment and the company relied on its policy to withhold over $50,000 in commissions from his final pay.

The Court held the policy on commissions did not fall within the employee’s contractual obligation to “comply” with the company’s policies. This is because the policy on commissions did not require the employee to “comply” with anything. Rather, introduction of the policy was an attempt to unilaterally vary the employment contract, which the employer was not entitled to do.

Akmeemana v Murray [2009] NSWSC 979

Author
Annamarie Rooding, Senior Associate

 

Who does this affect?
All Australian employers

What do you need to do?
Review your practices in light of these recent developments

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