This is a translation of the Article "Warum Unternehmensrichtlinien in der Praxis oft ungültig sind" published in the Standard.
The Code of Conduct, the Travel Expense Policy, the HR Directive, the Project Management Standard, and so on, all share a common purpose: they are intended to govern the behavior of employees as internal guidelines. However, the gap between aspiration and reality is often significant. This is particularly true regarding the legal effectiveness of guidelines. There is often a mistaken assumption that guidelines within the corporation are automatically valid because "the board has decided." The question of validity becomes relevant when employment consequences are based on the violation of a guideline, such as when termination is issued due to a breach of the Code of Conduct. Guidelines also form the basis for the Internal Control System and the Compliance Management System, and currently, sustainability reporting is added with the European Sustainability Reporting Standards (ESRS) recognizing guidelines as a central instrument for corporate governance.
What problems exist, and what are the causes?
Guidelines are general written instructions directed at a large number of employees within the company. Consequently, guidelines are static and do not always align with ongoing developments in the company or the corporation. In the worst case, employees may struggle to determine which guidelines are applicable to them. In addition, terms are often used inconsistently, and guidelines may be vague or too abstractly formulated. The reason for this is the lack of a quality control function or one that does not lead to discussions about structure, depth of regulation, and necessity with the entities responsible for implementing guidelines. Such a development is driven by departments that seek to emphasize their importance by issuing numerous guidelines, by departments attempting to shift responsibility, or by corporate departments wanting control but lacking insight into operational activities.
Especially in corporations, due to matrix structures and functional control, it is often overlooked that the mere existence of a corporate relationship does not automatically authorize the issuance of directly binding corporate guidelines. It is also often unclear that the authority to issue instructions in employment matters exists only in the relationship between the respective company and its employees, not between corporate functions of the parent company (e.g., Corporate HSSE) and employees in subsidiary companies. While it is possible to delegate the right to issue instructions to corporate functions, such an agreement is often lacking.
Implementation through Agreement
Either guidelines are part of the employment contract, or the obligation to comply arises based on an instruction. The disadvantage of a contractual agreement is that it is practically limited to newly entering employees. Although the applicability could be agreed upon through an additional agreement in an existing employment relationship, it requires the employee's consent. Experience shows that obtaining such consent from all employees is not feasible, resulting in significant administrative effort but no satisfactory outcome. Additionally, it should be noted that guidelines whose applicability is contractually agreed upon are generally classified as contract forms and are therefore subject to the validity and content control of §§ 864a and 879 (3) Austrian Civil Code (ABGB).
Instruction is the Better Option
The significant advantage of implementing guidelines through an instruction is that it does not require consent. Like any declaration of intent, it must be communicated to the employee. The implementation via instruction is "legally secure," for example, when the employee is informed by the disciplinary superior via email about which guidelines are binding for them, the guidelines are attached to the email, and the employee confirms receipt with a read receipt. It should be noted that the instruction (unlike the agreement) is limited to the specification of existing obligations.
Unacceptable General Reference
The approach of personal communication along with confirmation is cumbersome and less practiced. This leads to either no instructions being issued and thus no legal binding or instructions (as well as contractual provisions) being formulated as a general reference: "All applicable guidelines for the function in the currently valid version as published on the intranet under ... apply." There are considerable doubts about whether such references are permissible. In any case, according to my opinion, a general reference is unreasonable and therefore non-binding if, due to the number and scope of potentially applicable guidelines, an unclearly formulated personal and material scope of application, the difficulty of finding them within the guideline structure, and the continually changing content, it is unclear what behavior is actually required.
Less is More
Good guideline management focuses on a few essential guidelines. Guidelines that have the greatest practical benefit are those with a specific connection to ongoing activities, for example, when value limits or approval requirements are established. In addition to legally compliant implementation, they must be communicated clearly and require ongoing training: less is more
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