In the decision of Barker v Commonwealth Bank of
Australia  FCA 942 (Barker) Mr Barker made a number of
claims against his former employer, the Commonwealth Bank of
Australia (CBA) based on its selection of him for redundancy and
its failure to redeploy him.
Mr Barker was an employee of the CBA for 27 years. At the time
of termination of his employment he was an Executive Manager and
had signed a new employment agreement in mid-2004 (the
The Agreement provided that the parties could terminate the
Agreement at any time on 4 weeks' notice and made no provision
for redundancy procedures. Redundancies and redeployment were
provided for in a separate document, one of CBA's policies (the
Redundancy Policy), which specifically stated that it did not form
any part of an employee's contract of employment.
Following a decision to restructure Mr Barker's position
became redundant. The selection of Mr Barker was based on the fact
that although his performance was satisfactory, he was not
performing as well as others in the same position.
Mr Barker was advised that his position was redundant and there
was a "possibility" he would be retrenched at a meeting
on 2 March 2009. At this time Mr Barker was told CBA's
preference was to redeploy him and he was advised he would remain
on paid leave during the "redeployment period". Mr Barker
left the workplace on this day and did not return, CBA property was
provided back to CBA and Mr Barker's email and intranet access
On 9 April 2009 Mr Barker received a letter from CBA stating
that his employment was terminated due to redundancy. In this
letter CBA asserted that Mr Barker had been provided with notice of
termination at the 2 March 2009 meeting.
During the period 2 March to 9 April 2009 CBA did very little to
attempt to redeploy Mr Barker, which was further hindered by
internal emails regarding positions available continuing to be sent
to Mr Barker's then inactive CBA email account.
The Federal Court found that CBA repudiated the contract on 9
April 2009, by terminating the Agreement without notice – as
at the 2 March 2009 meeting it was only the "possibility"
of retrenchment that was raised.
The Federal Court also found there was "almost total
inactivity within a reasonable period" by CBA in attempts
to redeploy Mr Barker. This failure of the CBA was found to be a
serious breach of its Redundancy Policy.
Although the Redundancy Policy was expressed to be not part of
Mr Barker's Agreement, the Court held the Agreement included an
implied term of mutual trust and confidence, whereby CBA
"must not without reasonable or proper cause conduct
itself in a manner likely to destroy or seriously damage the
relationship of confidence and trust between the employer and
By failing to make reasonable attempts as required by the
Redundancy Policy, the Court held CBA had seriously breached its
policy which in turn was a breach of the implied term of mutual
trust and confidence.
It is not clear from the Federal Court's judgment how a
breach of a policy, expressly not part of the Agreement, can amount
to a breach of any term of the Agreement, whether implied or not.
On this basis it has been suggested by a number of commentators
that this finding is likely to be appealed.
The Court rejected Mr Barker's contention regarding his
selection for redundancy, as to do so would go beyond the scope of
the implied term of mutual trust and confidence and would be
contrary to the express contractual term that CBA could terminate
the Agreement at any time (with notice).
Mr Barker was awarded $110,000 for past earnings and $317,000
for future earnings. This was based on the fact that Justice
Besanko found that if proper attempts of redeployment had been made
there was only a 25% chance that Mr Barker would have successfully
been redeployed. Therefore Besanko J awarded 25% of the estimate of
future earnings of Mr Barker, had Mr Barker remained at CBA until
The importance of carefully drafted polices:
even where policies are specifically stated not to form part of the
employment agreement, policies need to be drafted in such a way as
to allow employer flexibility – as there will be times when
an employer may, for whatever reason, need to deviate from its own
Know the redundancy procedures: employers need
to know the various components to effecting retrenchments. It is
best practice to seek legal advice once any decision is made that
may result in redundancies.
Amend employment agreements: Besanko J noted
that the implied term of mutual trust and confidence is implied by
law and may be excluded by the express terms of a contract.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Kemp Strang has received acknowledgements for the quality of
our work in the most recent editions of Chambers & Partners,
Best Lawyers and IFLR1000.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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