Mutual duty of trust and confidence

The decision of the Full Federal Court in 2013 in Commonwealth Bank of Australia v Barker that employers owe employees an implied duty of trust and confidence, so that employees can obtain compensation for breach of that duty, particularly where it leads to termination, has been appealed to the High Court.

The Full Federal Court considered such a duty arose by reason of the events leading up to the termination of the employee but also determined that the implied duty could be excluded by agreement that employer policies not be terms of the employment contract.

However in this case, the employment contract contemplated the possibility of redundancy and redeployment and it was this that gave rise to the operation of the implied term in relation to the redundancy.

Employers should therefore exclude their policies from their employment contracts and ensure that their contracts are appropriately worded so as to overcome the implication of such a duty.