Commonwealth Bank of Australia v Barker (2014) 312 ALR 356
Contract; terms implied in generic contracts by law; employment contracts
Facts: Barker was employed by the Commonwealth Bank of Australia (CBA) from 1981 until 2009, when his position was made redundant. CBA gave Barker four weeks’ notice of termination but gave him the option of finding suitable redeployment in the bank within that time. Barker was told not to come to work during the four weeks of notice and unfortunately Barker’s email and voicemail accounts were also immediately stopped. Neither Barker nor the other employees at CBA were informed of this disruption to their communications and so all efforts to find a position to which Barker might be redeployed were fatally delayed. When the notice period expired, Barker’s employment at CBA was terminated. Barker sued CBA for breach of a term implied by law into his employment contract, which he argued created a duty on the parties to maintain each other’s trust and confidence and not behave so as to damage or destroy that trust and confidence.
Issue: Does Australian law make it a term of employment contracts that neither party will act so as to destroy or seriously damage the relationship of trust and confidence that exists between them?
Decision: No such term is implied by law into employment contracts.
Reason: In their majority judgment, French CJ, Bell and Keane JJ applied the test for recognising the existence of an implied term in a class of contracts. This test requires that such a term is ‘necessary’ for the effective working of such contracts, rather than just being reasonable. The suggested term of maintaining mutual trust and confidence is not necessary for employment contracts to function properly. Although such a term is implied in employment contracts in the United Kingdom, this is the result of a unique sequence of cases in that jurisdiction. French CJ, Bell and Keane JJ also held that to imply such an obligation would be ‘beyond the legitimate law-making function of the courts’ because it would involve the courts assuming ‘a regulatory function’ better fulfilled by the legislature.