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Pendlebury Workplace Law is a specialist workplace relations and employment law legal practice based in Sydney.

Implied mutual term of trust and confidence – Commonwealth Bank v Barker

There is now an implied mutual term of trust and confidence in about 9 million Australian employment contracts, according to Victorian barrister, Mark Irving, who appeared for the ACTU in the Federal Court case that confirmed the term’s existence. 

In a paper on the Commonwealth Bank v Barker decision, Mark Irving presented to a seminar hosted by the Australian Institute of Employment Rights and the Australian Labour Law Association in Melbourne last week, Irving said that because the trust and confidence term was implied by law, not fact, it was incorporated into all contracts of employment. 

A term implied “in fact” had to satisfy the five tests in the High Court’s BP Westernport decision, which included that it was needed to give business efficacy to the contract, he said. 

Irving said that a term that the parties not do anything to destroy mutual trust and confidence in an employment relationship would not pass that test, because contracts of employment could work without it. 

Instead, the majority judges in Barker had for the first time confirmed the existence of the term in Australia’s common law, although Irving noted that the Bank had sought leave to appeal the decision in the High Court.  Irving said the implied term had been part of UK law since at least 1998, when the House of Lords ruled in Malik v BCCI

Irving said the Barker majority judges had pointed to 11 Australian appellate court decisions in which the issue had previously been considered but not unequivocally determined. 

He said the Court’s acceptance of the term was part of the necessary development of the common law.  “The common law is more than a system of static rules. It is the story of a nation. And the story never ends. The common law develops as public policy changes; and as our prejudices (read preferences and predispositions) evolve, and as the experience of modern life changes,” he said. 

Brooke Pendlebury
Sunday, November 3, 2013
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