Companies with employee handbooks: Beware. An employer’s failure to adhere to a handbook policy regarding progressive discipline may be used as evidence of an improper termination. Therefore, it is critical that an employer be familiar with its own employee handbook and ensures that its practices conform to the stated policies.
It is also important that the language in a handbook is flexible enough to allow the employer to alter and adjust such policies as needed. Consequently, employers are urged to invest some effort and carefully draft their employee handbooks to reflect their business needs.
For example, in a recent Massachusetts Superior Court case, Ferry v. Rosewood Construction, a contractual employee sued his employer, claiming a breach of the employment contract, after he was suddenly terminated. The employment contract provided that the employee would maintain his employment as long as he maintained the responsibilities of his job description according to industry standards.
Prior to the employee’s discharge, the employer had adopted a “generic” employee handbook, without consulting with an attorney or an employment specialist. This handbook’s progressive discipline policy provided that for a first offense, a written or verbal warning would be issued; the next offense mandated suspension; and a subsequent offense would mean termination. The company, however, retained the right to discharge, demote or suspend an employee without warning for serious offenses. The employee had never received any type of discipline prior to his termination.
The court recognized that, notwithstanding an employment contract, an employer in Massachusetts does have the right to terminate a contractual employee, in good faith, for reasons such as lack of capacity or diligence, failure to conform to usual standards of conduct, or other culpable or inappropriate behavior.
In this case, the court found that the employer had no such reason. The court agreed that the disciplinary policy was not binding on the employer with respect to this particular employee. Nevertheless, it concluded that the employer’s failure to follow the disciplinary protocol outlined in the handbook was evidence that the employee was improperly fired, in breach of the employment contract. Subsequently, the employer was responsible for paying the remainder of the employment contract.
The court’s decision reveals that, although the employee handbook is an integral part of the communication between an employer and the employee, it presents many pitfalls. If you need any assistance with drafting or reviewing your employee handbook, you are urged to contact an attorney or an employment specialist.
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