King & Wood Mallesons

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Full Federal Court reshapes Australian employment contract law

In the matter of CBA v Barker [2013] FCAFC 83, a Full Federal Court majority has held that there is implied by law into all Australian employment contracts a term of mutual trust and confidence.

The term can be expressed as a requirement that the employer will not, without reasonable cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.

The term’s boundaries are uncertain and the term will be ‘moulded’ according to the nature of the relationship and the facts of the case. This makes its application complex and unpredictable…

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