Can custom and practice override written terms and conditions?
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An employee’s employment agreement will set out the general terms and conditions under which the employment relationship will operate. The company will also have set policies and procedures that provide specific guidelines with respect to how the company will operate, and therefore how the employee is expected to undertake their duties and responsibilities.
While it would generally be viewed that these are the documents that need to be relied upon if any dispute arose, the strength of these documents can easily be eroded if the company does not strictly enforce adherence to these requirements.
However, while The Employment Relations Authority (ERA) have reinforced that an employer who fails to follow their own policies can incur a wrongful termination claim, case law also reinforces that these policies can be overridden by custom and practice.
Frequently Asked Questions.
Can failure to follow your own company policies lead to a wrongful termination claim?
The Employment Relations Authority have determined in a number of cases that, where the employer puts in place a specific policy regarding disciplinary or performance management procedures, the employer is then duty bound to follow their own process. The determinations of the Authority confirm that where the employer failed to follow their own process, the dismissal was deemed to be unjustified.
What is custom and practice in employment?
Despite the presence of robust policies and procedures, it Is not uncommon for manager’s to either ‘turn a blind eye’ to employee practices inconsistent with the policy or procedure, or to apply a more discretionary approach to how employees are able to operate outside of the policy or procedure.
Where a manager allows employee practices to exist, inconsistent with the policy or procedure, the ongoing permitting of these, establishes the ‘new standard’ for the employee.
Manager ‘permission’ may occur through both direct instruction (telling people that they can do something different) or through indirect authorisation (not addressing non-adherence)
Custom and practice can be established within a matter of a few months and creates the ‘new norm’ for the employees with respect to the relevant policy or procedure.
What can we do if we want to change ‘custom and practice’ ?
If any employer recognises that adherence to the original policy or procedure has slipped, and they want to bring staff back to the original expected standards and practices, the employer can reissue the policy or procedure and provide clear instruction that ‘as of that date’ strict adherence to the policy and procedure will need to occur.
From that date on, managers and employees will be required to revert to the original expectations with a failure to adhere (a continuance of the custom and practice) potentially leading to formal disciplinary action – breach of company policy and/or procedure or failing to follow a lawful instruction.
Any explanation from an employee that ‘but this is how we have always done this’ will not be justified after the date of the reissuing of the policy or procedure, as long as management have sought to ensure that these required standards are maintained.
Can an employee use ‘custom and practice’ as a defence?
In the recent case of Shorter v Waiheke Islands Supported Homes Trust [2026] (WISH) https://determinations.era.govt.nz/determination/view/20991 Ms Shorter was terminated from her employment for sleeping during her rostered night shifts.
WISH argued that they were justified in terminating Ms Shorter’s employment as they had a policy forbidding employees from sleeping during their shifts. Mr Shorter’s defence was that, although this might have been the policy, management were aware staff did sleep and that they did nothing about it.
In the ERA’s determination on the matter, Authority Member Craig stated:
“I conclude that there was an awareness by management that sleeping was going on but although general reminders were given at a staff hui not to sleep, it could be said that a blind eye was being turned to it.”
“WISH was entitled to draw the line and tell staff explicitly, preferably in writing, that it was changing from what could have been seen as turning a blind eye to sleeping, to requiring there was no sleeping, with disciplinary action to be taken if sleeping was observed. But it did not do that.”
The Authority therefore effectively concluded that, although the employer had a policy in place, that policy had been overridden by the custom and practice of not addressing employees who were known to be sleeping on the job. WISH could not therefore rely on its own policy to terminate Ms Shorter’s employment with the ERA therefore concluding that she had been unjustifiably dismissed.
This case demonstrates that, at times, even following your own company policies can lead to a wrong termination claim.
How can Russell Drake Consulting assist in defining whether custom and practice have overridden the intention of the company’s policies and procedures?
If you are seeking to implement any form of disciplinary action, and question whether you can rely on the company policy and procedure to support the allegations, please feel free to give us a call to do a risk assessment and determine what options you have available to you.