Employment Terms and Conditions – Where do they come from?
In Australia the Fair Work Act regulates the employment relationships. There are also many other pieces of legislation, e.g. superannuation, WH&S, long service leave, anti-discrimination, etc. that apply. In addition, for employees other than managers, there are very few jobs that do not have an award that sets out the specific terms of employment. Add to this the written contract of employment that every employee should have.
However, an often-forgotten provision is called ‘custom and practice”.
In employment law, custom and practice refers to a pattern of behaviour or an unwritten rule that has developed over time in a workplace and has become an accepted part of the terms and conditions of employment — even if it's not written in a contract.
So what are the key features of custom and practice:
1. Consistency – The practice must have been followed regularly and consistently over time (e.g., every year, staff receive a Christmas bonus).
2. Duration – It must have occurred over a significant period. There’s no fixed timeframe, but the longer the practice has been in place, the stronger the case.
3. Expectation – Employees must reasonably expect the practice to continue (i.e., they believe it's a right rather than a one-off gesture).
4. Clarity – The practice must be clear and unambiguous. If it's vague or inconsistent, it's less likely to form part of the contract.
Examples of Custom and Practice:
• Paying overtime at a certain rate, even though it’s not mentioned in the employment contract.
• Providing shooting rights or the right to collect firewood on the farm.
• Giving extra holiday days over and above statutory entitlement each year.
• Providing a work car or other benefit that has never been formalised in writing.
If a custom and practice becomes "implied" into an employment contract, it can be legally enforceable. That means if an employer tries to remove the practice (e.g. stopping a long-standing annual bonus), employees may have grounds for a grievance or even a legal claim, such as breach of contract.
Members should consider what they provide to their staff and ensure that any benefit given is not suddenly withdrawn. Withdrawing a benefit that is deemed to be custom and practice may save a few dollars to start with but cost more in the long run.