Commonwealth Bank of Australia v Barker [2014] HCA 32
The High Court has determined that the term of mutual "trust and confidence" is not implied into every contract of employment in Australia.
This judgment overturns the Federal Court's decision in Barker v Commonwealth Bank of Australia, which found that the Commonwealth Bank breached the implied term of trust and confidence when it failed to consider redeployment opportunities for one of its executive managers shortly before dismissing him.
This decision is good news for employers, as it alleviates the concern created by the Federal Court decision that every employer would potentially be liable for damages caused by conduct that "destroys or seriously damages the relationship of trust and confidence between itself and each employee".
What was the significance of the case?
The decision has allayed the fears of employers that the implied term of mutual "trust and confidence" would be imported into nine million Australian employment contracts: an outcome that would have been a real game changer for Australian employment law. The potential breadth of such an implied term would have created uncertainty for employers when managing human resources risks. For example, in the UK, where an implied term of "trust and confidence" exists, the implied term has been used to sue employers in a number of circumstances including:
- workplace bullying
- lack of procedural fairness in workplace investigations
- excessive workloads, and
- unreasonable location requests.
The High Court's decision has certainly closed off the avenue of contesting workplace decisions and actions on the basis of an implied term of mutual trust and confidence. However, other avenues still remain and are frequently used.
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.
