On 10 September 2014, the High Court overturned Federal Court
decisions which allowed the general implication into employment
contracts of a term requiring the employer to act so as to avoid
damaging the relationship of trust and confidence with the
In the case of Barker v Commonwealth Bank of Australia,
the bank had managed a redeployment process following on Mr
Barker's redundancy in a very slapdash manner. The Bank sent
communications to Mr Barker about redeployment opportunities
– but only by way of his work email address which had been
disconnected on the date of his redundancy.
Mr Barker argued, and two levels of the Federal Court agreed,
the Bank was under a general obligation to avoid damaging the
relationship of trust and confidence with him as an employee
in this case that required the bank to take positive steps to
give Mr Barker the benefit of its redeployment program
and failing to do so resulted in damages exceeding
These decisions adopted an approach taken by English courts in a
different industrial relations context, and by a somewhat
adventurous use of the rules regarding implication of terms into
The High Court overturned these decisions and held that the Bank
was not liable to Mr Barker except for a small amount due under his
contractual notice entitlements. The High Court relied on
conventional analysis of when a term should be implied into a
contract because of necessity, and decided that there was no
necessity in this case, and also that implication of such a broad
and uncertain term would have uncertain consequences both for
employers and employees, and was therefore a matter for legislation
rather than lawmaking by the courts.
The possible existence of an implied term as to trust and
confidence has caused much speculation among employers and
employment lawyers, because it potentially opened up a wide range
of situations in which an employee could sue for damages for breach
of contract. However, the High Court's decision makes quite
clear that this term will not be routinely implied into contracts
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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