Commonwealth Bank of Australia v Barker [2013] FCAFC 83
On 6 August 2013, the Full Federal Court confirmed that an implied term of mutual trust and confidence exists in Australian employment contracts.
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 term.
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 legal costs.
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 confidence.
What next?
For the time being, the Full Court's decision is the law on the issue. However, many commentators anticipate an appeal to the High Court.
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.
