Employment Law Alert - October 2009 - Reed Smith

vast majority of the conduct complained of occurred prior to the introduction
of the new clause in the Handbook and the employer did not at the time take
action to terminate any employees’ employment in response to the offending
conduct. Furthermore, the employer’s failure to act on the alleged misconduct
at the time when it occurred meant that the employer had ‘waived’ its right to
summarily dismiss in any event. Justice Chu stated:‐
“Having decided not to terminate the employment then, the defendant [the employer]
could not rely on these contacts to summarily dismiss these claimants some six or
seven months later. The suggestion that the defendant did not in May 2008
appreciate the gravity of the matter does not afford a justification for summary
dismissal in December 2008.”
• In addition, the employees’ conduct did not in any event factually breach the
relevant term of the Handbook as amended.
• In relation to a Mr. Lam (a single employee whose conduct did post‐date the
amendment to the Handbook), the Court interestingly found that the term had
still not been incorporated in the employee’s contract of employment.
Importantly Justice Chu stated:‐
“Before the amendments can be incorporated to become part of the employment
contract, Mr Lam [the employee] must have notice and knowledge of the
amendments. Even though he was under a contractual obligation to pay attention to
the notice board and that he had failed to observe it such that he was unaware of the
amendments, it does not mean that the amendments will, without more, become part
of the employment contract.”
Practical implications
This case demonstrates the need to carefully review and amend Employee
Handbooks, which may or may not form part of employees’ contracts of
employment, as well as the need for employers to carefully investigate matters
which may lead to the summary dismissal of an employee. In particular, an
employer should carefully consider the exact wording of conduct it wishes to
prohibit which may lead to summary dismissal and the employer should take
special care to ensure that any ‘amendment’ to the Employee Handbook is
actually incorporated into the Employment Handbook, so that it may be relied
upon – if it indeed wishes to do so. In this case, the employer failed on all counts
as the relevant term was not incorporated and nor was the wording specific
enough to match the conduct alleged.