In our September 2006 edition of the working paper we reported on Nikolich v Goldman Sachs JBWere Services Pty. In this decision, Justice Wilcox in the Federal Court of Australia found that certain sections of a Goldman Sachs JBWere Services Pty Limited (“GSJBW”) policy document titled “Working With Us” (“WWU”) formed terms of the contract of employment between Peter Nikolich and GSJBW.
The Trial
Justice Wilcox found that GSJBW had breached these terms and as a result of this breach, that Mr Nikolich suffered a serious psychological injury. His Honour awarded damages of $435,896 for loss of past and future income and $80,000 by way of general damages for pain and suffering.
The relevant sections of WWU dealt with providing and maintaining a safe and healthy workplace, preventing harassment in the workplace and a commitment by GSJBW to deal with employee grievances in a particular manner.
The Appeal
GSJBW appealed Justice Wilcox’s decision and on 7 August 2007 the Full Bench of the Federal Court handed down its decision on the appeal. The Full Bench agreed that sections of WWU dealing with providing and maintaining a safe and healthy workplace constituted a contractual promise by GSJBW but that the sections on harassment and employee grievances were not contractual terms.
The majority of the Full Bench agreed that GSJBW had failed to deal with Mr Nikolich’s complaints regarding his manager quickly or effectively. GSJBW had failed to take “every practicable step” to protect Mr Nikolich’s health and safety and therefore breached this contractual term. As a result of this breach, Mr Nikolich developed a major depressive illness.
The award of damages was upheld and GSJBW were ordered to pay 90% of Mr Nikolich’s costs of the appeal.
Implications
This decision confirms that the courts are willing to find that an employer’s policies can form part of the employment contract and that these policies will be binding on employers as well as employees. Employers should consider the obligations that their own policies impose on themselves as well as the obligations imposed on employees.
