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Updating contracts: What to do when staff refuse to sign

21 August 2020 | Sonya Black, LLB (Hons), B.Com, Special Counsel – Employment Law, Avant Law, QLD

Kathy, the practice manager, is doing a routine check of the practice’s employment documentation when she realises with some concern there is no record of existing staff ever having signed a confidentiality agreement.

She prepares a simple agreement and asks the staff to sign.

A week later, she notes that Andrea, a long-standing part-time receptionist, has yet to put pen to paper.

When Kathy approaches her about it, Andrea says she has no intention of doing so.

They are in the reception area so Kathy doesn’t get a chance to ask about Andrea’s reasons.

However she is taken aback as it hadn’t occurred to her someone might refuse, so she speaks to the practice principal and contacts her medical defence organisation for advice.

What can the practice do to ensure Andrea signs the agreement?

Can you require an employee to sign?

Such situations can be challenging for employers to navigate. There will often be legitimate business reasons to update employment contracts.

Spelling out obligations, such as those of maintaining privacy and confidentiality, in a signed contract is the best way for an employer in such a scenario to:

  • demonstrate that staff are aware of their obligation;
  • take disciplinary action against an employee who fails to uphold their obligations;
  • defend the employer’s actions if an employee breaches their obligations.

Employers may assume that such changes are purely procedural ones that document an employees’ existing obligations — in this case to keep information private or confidential.

However, spelling out the obligations in a signed contract does change the agreement between the parties.

The upshot is that an employer cannot force or require an employee to sign an amended contract.

A signature indicates that the signee has read, understood and accepts the terms of the document.

It can be difficult for employers to implement new terms or agreements with existing staff, particularly if the objective is to protect or benefit the business without evident benefit to the employee. However, there are some things you can do to manage the situation and overcome an employee’s reluctance to sign an important agreement.

Make sure you understand an employee’s concerns

How you go about updating or amending agreements is likely to have a significant impact on how employees respond.

Handing out an agreement without explaining the context or background might be contributing to Andrea’s reaction in this scenario.

A better approach would have been for Kathy to speak to all employees, explain the issue and what she was hoping to achieve by asking them to sign the new agreement.

It is a good idea to set up a meeting with the staff member, with plenty of time in a private and uninterrupted space to fully explore their concerns.

But be careful to avoid any impression of duress or pressure — the purpose of the discussion is to explore the concerns, not to achieve a signature.

Despite these measures, the employee may not be willing to fully disclose their concerns, or their concerns may not be easily resolved by discussion.

Amending agreements

Legally, a binding agreement requires offer, acceptance and ‘consideration’ (the value or the price of the bargain).

If an employee is being asked to sign a document without being given anything in return, there is no consideration.

A pay rise or other bonus or benefit constitutes consideration and can give the employee reason to accept.

This means that when you are reviewing a staff member’s remuneration, it may be a good time to review your employment contracts and, if necessary, draw up new contracts to include any changes that may need to be made.

For employees who are covered by an award, consideration must be more than their entitlement under the award (for example, an above-award hourly rate).

You can include in your employment contracts a requirement that staff comply with practice policies and procedures.

The contract should state that these policies and procedures are not contractual terms, and may be amended or updated occasionally.

The contract should make it the employee’s responsibility to stay up to date with changes to the policies but it is always good practice to let employees know when policies are changed.

This gives the employer the flexibility to update policies unilaterally if required — though it is always best to do so in consultation with your team, if possible.

Never dismiss or terminate an employee for refusing to sign a document without seeking advice as this could leave you open to awkward and costly employment claims.

Managing the situation: recommended steps

Kathy’s practice could take the following steps:

  1. Set up a meeting with Andrea to discuss her concerns and explain the practice’s rationale for updating the contracts. It is important to keep a careful note of what is discussed at the meeting.
  2. If Andrea still refuses to sign, the practice cannot terminate Andrea’s employment for this reason without being exposed to unfair dismissal and general protections claims.
    If discussing Andrea’s concerns does not resolve the issue, the practice needs to assess how much risk the lack of signed agreement poses to the practice.
    They could consider whether there are other ways to manage the risk going forward — for example holding additional training, checking that practice policies address issues such as confidentiality and asking all staff to read the relevant policies and sign to say they have read them.
    It may also help to remind staff that they have obligations in respect of confidentiality and privacy under the general law even if they are not prepared to sign a confidentiality agreement.
  3. At the next opportunity to review staff remuneration, the practice could implement new employment contracts requiring adherence to policies and procedures and check that practice policies are up-to-date and accessible.

Key lessons

Implementing new terms or conditions in existing employment agreements requires careful management.

Getting advice at the outset and setting up strong contractual terms may help prevent issues arising in the first place.

Having a clause in employment contracts requiring adherence to policies and procedures gives employers greater flexibility to manage issues that are likely to evolve in light of technologies, business practices or social expectations.

More information

If you require advice on contracts or employment issues, visit our website or for immediate advice, call us on 1800 128 268, 24/7 in emergencies.

This article was originally published in AusDoc.PLUS on 12th May 2020.

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