Commonwealth Bank of Australia v Barker 
On 6 August 2013, the Full Federal Court confirmed that an
implied term of mutual trust and confidence exists in Australian
What did the court decide?
The Full Court's decision came about after the Commonwealth
Bank lodged an appeal against the decision of Justice Besanko of
the Federal Court.
Justice Besanko had found that:
an implied term of mutual trust and confidence existed in the
employment contract between the bank and an employee
the bank had breached this implied term by failing to comply
with its redeployment policy, and
the bank should pay damages to the employee for his loss.
Justices Jacobson and Lander of the Full Court agreed with
Justice Besanko's decision that this implied term existed in
the employment contract. But they didn't think it was necessary
to even consider the redeployment policy in deciding whether the
bank breached this implied term. Instead, they found that the
bank's failure to consult with the employee and tell him about
suitable redeployment options amounted to a breach of this implied
The Full Court judges upheld the employee's claim for
damages as a result of the bank's breach. The bank was ordered
to pay the employee damages totalling $335,000, as well as his
What does this mean for employers?
An employer may face a common law claim for damages if:
it acts unreasonably towards an employee, and
its conduct breaches the implied contractual term of trust and
For the time being, the Full Court's decision is the law on
the issue. However, many commentators anticipate an appeal to the
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The case is positive news for employers facing a compensation claim for a stress-related injury from disciplinary action.
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