On Point - Issue #4

Interpreting Employment Instruments

1. Human resource professionals, industrial relations specialists and employment lawyers are regularly required to interpret employment conditions. These are contained in laws, awards, enterprise agreements and contracts of employment which are then applied in the workplace. Most of the time they overlap.
2. There are legal rules governing how employment instruments are interpreted. A common, easily understood principle is that you start with the meaning of the words. Most questions can be answered at this stage. If not, the context and purpose become important.
3. Context is not the facts on which the employment instrument is applied. Context is the employment instrument itself. Understanding purpose requires understanding the employment instrument as a ‘whole’. What is the employment instrument trying to achieve?
4. Despite these common principles there are differences when interpreting different employment instruments.
5. If the meaning of a law is ambiguous, other parliamentary material can assist. These cannot displace the words of the law but can assist understand their meaning.
6. Award’s and enterprise agreements must be interpreted according to ‘industrial realities’. These are the customs within an industry that a workplace operates in. When interpreting an award, its history can be important. Because awards and enterprise agreements tend to be drafted in practical terms a flexible approach is taken to their interpretation.
7. Perhaps conversely, an 'objective test' applies to contracts. No case law says this is any different for employment contracts. This means employment contracts are interpreted by how a ‘reasonable person’ reads the contract, not the views of employer or employee who agreed to the contract. References in employment contracts to laws, awards, enterprise agreements or polices will form part of its interpretation.