The High Court of Australia has handed down its decision on 10
September 2014 allowing the appeal from the earlier decision of the
Full Federal Court (see Commonwealth Bank of Australia v Barker
 FCAFC 83) to confirm that there is no common law implied
duty of mutual trust and confidence in Australian employment
The case concerned the termination (by way of redundancy) by the
Commonwealth Bank of Australia ("CBA") of the employment
of one of its Executive Managers, Stephen Barker, whose employment
was governed by a written agreement dated 1 July 2004 ("the
Mr Barker was informed of his redundancy on 2 March 2009 and
given 4 weeks notice (later extended until 9 April 2009) at which
point, if no redeployment opportunities were found, the redundancy
would take effect.
Mr Barker was directed not to return to work during the notice
period and was instructed to clear out his desk, hand in his keys
and work mobile phone. CBA also terminated Mr Barker's access
to the work intranet, voicemail and email account.
During the notice period, a redeployment opportunity was found
and the CBA Career Support Team tried to contact Mr Barker via his
work email address to inform him of this. However, as Mr Barker did
not have access to his work communication channels, he was unaware
of this opportunity and could not apply for it and was ultimately
made redundant on 9 April 2009.
Mr Barker commenced proceedings in the Federal Court on 17
November 2010 arguing, amongst other things, that the conduct of
CBA was in breach of the implied term of mutual trust and
confidence and resulted in his having been denied the opportunity
to retain his employment with CBA by being redeployed, thereby
suffering a lost chance.
The proceedings on appeal concerned the question of whether or
not the Full Federal Court was correct in finding that there was an
implied duty to maintain mutual trust and confidence under the
Australian law of employment.
The existence of this implied duty stems from English
jurisprudence in the House of Lords decision of Malik v Bank of
Credit and Commerce International SA (in liq)1 ('Malik')
where it was held that there was an implied duty in employment
contracts that the employer and employee would not, without
reasonable cause, conduct themselves in a manner likely to destroy
or seriously damage the relationship of confidence and trust. The
existence of the same duty in Australia has, up until this
decision, remained an open question.
In upholding CBA's appeal and rejecting the Federal
Court's finding of the implied term, the High Court noted:
the restricted scope of Australian judicial power in implying
contractual terms which must not trespass into a legislative
function of creating legal principles governing the contractual
relationship, as well as;
Drawing a distinction between the present case and the UK Malik
French CJ, Bell and Keanne JJ specifically mentioned that the
Malik decision belongs to a very particular context of the law of
constructive dismissal whereby the employee terminates their
employment by reason of the employer's conduct which is such as
to entitle the employee to treat the employment as at an end.
Their Honours pointed out therefore that the decision of Malik
must be understood within this context as opposed to being a
general proposition for implying the duty of mutual trust and
confidence into the performance of employment contracts.
As such, their Honours concluded that:
"Importantly, the implied duty of trust and confidence
as propounded in Malik is directed, in broad terms, to the
relationship between employer and employee rather than to
performance of the contract. It depends upon a view of social
conditions and desirable social policy that informs a
transformative approach to the contract of employment in law. It
should not be accepted as applicable, by the judicial branch of
government, to employment contracts in Australia." [at
In a separate judgment Gageler J, who also rejected the
implication of the duty, added that to import the implied term of
mutual trust and confidence into Australian employment law
contracts would be a potential "Trojan horse" in the
sense that implied duty would often only be clarified after the
The Commonwealth Bank was therefore successful in overturning
the finding in favour of Mr Barker at the Federal Court level.
Thus, whilst Australian jurisprudence has accepted that
contracts of employment involve some elements of "mutual
confidence," the High Court has confirmed that at least for
now these elements do not affect the interpretation of employment
contracts by imposing implied duties at common law into employment
contracts in Australia after the event.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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