Australian Federal Court confirms existence of implied term of mutual trust and confidence

The recent Federal Court decision of Commonwealth Bank of Australia (CBA) v Barker [2013] FCAFC 83 sets an important new precedent for employment law. For the first time in Australia, an implied term of mutual trust and confidence has been incorporated into an employment contract and damages awarded for a breach of that term.

The implied term of mutual trust and confidence has been recognised by UK courts since the 1970s, but until now has not found a home in Australian common law. In this watermark case, the court upheld this implied term and stated that an employer was required to not, without reasonable cause, ‘conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust’ between the employer and the employee.

Barker was an executive manager at CBA. Barker’s employment contract required CBA to consider redeployment opportunities prior to termination. When CBA moved to make Barker redundant, not only did it fail to consider redeployment opportunities but it withdrew his email and phone facilities without notifying the redeployment officer. The redeployment officer had made a number of unsuccessful attempts to contact Barker by those means…

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