The Full Federal Court has recently handed down a significant
decision in the case of CBA v Barker  FCAFC 83. It concluded
that there is an implied term of mutual trust and confidence in all
Australian employment contracts. Contravention of the term will
give grounds to seek damages for breach of contract.
What does an implied term of trust and confidence mean?
Put simply it means that, without being expressly stated, it is
automatically implied that employers and employees will not,
without reasonable cause, conduct themself in a manner likely to
destroy or seriously damage the relationship of
confidence and trust between the employer and employee.
This implied term proceeds upon the basis that trust and
confidence is necessary for a workable and productive employment
relationship. On the face of it, that appears to make good
practicable sense. In reality, however, the breadth of its
application - bearing in mind it underpins the entire employment
relationship - may give rise to unforseen litigation.
CBA v Barker  FCAFC 83 - the facts
Mr Barker was employed as a senior manager with Commonwealth
Bank (the bank) in Adelaide. He had enjoyed some
27 years of employment before being advised that his position was
redundant. In line with the bank's non-contractual redundancy
policy, Mr Barker was informed that redeployment opportunities
would be explored with him.
Mr Barker was sent home on paid leave. His work email and mobile
telephone were terminated. What followed thereafter was a direct
failure by the bank to make contact with Mr Barker to discuss
redeployment options. It transpired that the bank initiated contact
through the terminated email address and mobile telephone. It was
only some three weeks later that the bank's staff finally made
contact by sending an email to Mr Barker's personal email
address. In the meantime he was effectively 'left
Ultimately Mr Barker was not redeployed and his employment was
terminated by reason of redundancy. Mr Barker complained that the
bank's conduct in relation to redeployment constituted a breach
of an alleged implied term of mutual trust and confidence
It was held that the bank's actions constituted a breach of
trust and confidence. The term was held to be implied in all
employment contracts save when it is expressly excluded. The
decision was made on the basis that Mr Barker was a long term
employee of a large corporate employer. In consideration of the
fact that the bank operated a redundancy policy which provided for
redeployment, it was held the bank should have taken positive steps
to consult with Mr Barker and inform him of suitable redeployment
options. The term of mutual trust and confidence was breached
because it failed to properly contact Mr Barker within a reasonable
period. Mr Barker was awarded over $300,000 in damages.
Key considerations for employers
Due to the wide scope of the term of mutual trust and confidence
it is difficult to foresee all of the potential actions that could
rely on this novel head of claim. To best protect your business we
advise that you:
Ensure that you operate in accordance with contracts of
employment and workplace policies;
Ensure that all disciplinary and grievance matters are
investigated and responded to in a fair and unbiased manner with
regard for natural justice;
Seek to achieve an open and honest employment environment where
trust is emphasised as a key factor; and
Take legal advice when dealing with contentious employee
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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