In Commonwealth Bank of Australia v Barker [2014] HCA 32 the High Court of Australia allowed the CBA’s appeal from two previous Federal Court decisions that the Bank breached its employment contract with a former manager by making him redundant rather than redeploying him. The High Court reduced the employee’s damages award from $317,500 to $11,692.31 (representing 4 weeks pay). (Background).

The trial judge had found that there was a term of mutual trust and confidence implied in the Employment Agreement which would be breached if a party, without reasonable and proper cause, engaged in conduct likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. He held that the Bank’s failure to take meaningful steps with respect to the employee’s redeployment, within a reasonable period, was a serious breach of the Redeployment Policy and thereby a breach of the implied term.

Allowing the appeal, the High Court held that the proposed term was not necessary in the sense that would justify implying it by law into all employment contracts.

The High Court distinguished between an employee’s duty of trust and confidence and fidelity and an obligation on an employer not to engage in “trust-destroying conduct”.

The majority of 3 judges in a joint judgment said:

The complex policy considerations encompassed by those views of the implication mark it, in the Australian context, as a matter more appropriate for the legislature than for the courts to determine. It may, of course, be open to legislatures to enshrine the implied term in statutory form and leave it to the courts, according to the processes of the common law, to construe and apply it. It is a different thing for the courts to assume that responsibility for themselves. …”.