Since our previous article "Employer Obligations
– Fundamental Change Ahead?" the full bench of the
High Court handed down its decision in the ground-breaking appeal
of Commonwealth Bank of Australia v Barker  HCA 32.
The appeal primarily raised the question whether, pursuant to the
common law of Australia, there is a term of mutual trust and
confidence implied by law into every employment contract.
The respondent, Mr Barker, had been an employee of the
Commonwealth Bank ("the CBA") for 27 years. On 2 March
2009, the CBA informed Mr Barker that his position was redundant. A
redeployment policy was in place within CBA at the time, and a
specific clause within the contract also required the employer to
take reasonable steps to redeploy Mr Barker within the
organisation. A human resources officer intended on assisting Mr
Barker with the redeployment process, however attempts to contact
Mr Barker failed because his access to e-mail and CBA phones was
cancelled on the day that he was informed of his redundancy.
Mr Barker relied on an implied term of mutual trust and
confidence to say that CBA should have more effectively assisted
with potential redeployment within CBA. Mr Barker was successful at
first instance and on appeal in obtaining a substantial award of
damages flowing from a breach of this implied term.
On 10 September 2014, the High Court unanimously held that the
implied term is not implied into all employment contracts.
The majority reasons closely examined the development of the
term, particularly in the United Kingdom where it has formed part
of the law since the case of Malik v Bank of Credit and
Commerce International SA (In Compulsory Liquidation) 
AC 20. In Malik, the implied term was considered important
to appropriately reflect the shift in the concept of the employment
relationship – from the master-servant relationship to the
more contractual relationship between employer-employee.
Although it was acknowledged that a similar shift (albeit with a
much shorter history) has occurred in the Australian employment
relationship, the High Court stressed that a term will not be
implied by law unless it is necessary for the enjoyment of
the rights associated with the contract. A term of a contract is
not considered necessary if it is merely reasonable.
The implied term of mutual trust and confidence was not deemed
necessary for the effective working of the employment contract.
Some of the supposed limitations that the implied term was
considered 'necessary' to overcome may already be
contemplated by the doctrine of constructive dismissal.
However, the debate may not end here. It was recognised by the
High Court that whilst the implied term was not deemed necessary at
common law to ensure the effective working of the employment
contract – and thus should not be implied by the Courts
– there is scope for the legislature to consider amendments
to the statutory framework to incorporate the term at some stage in
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.
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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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