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  • Employment contracts do not contain a term of mutual trust and confidence implied by law
  • In Commonwealth Bank of Australia v Barker [2014] HCA 32, the High Court held that the implication of a term of mutual trust and confidence in employment contracts is a step beyond the legitimate law-making function of the courts
  • In declining to follow decisions of the House of Lords recognising the implied term, the High Court noted that Australian judges must ‘subject [foreign rules] to inspection at the border to determine their adaptability to native soil

Employment contracts do not contain a term of mutual trust and confidence implied by law. This was the unanimous conclusion of the High Court in Commonwealth Bank of Australia v Barker [2014] HCA 32 (Barker). Barker also provides an insight into the High Court’s approach to its law-making function and the ‘sensible use’ of comparative law.


The Bank employed Mr Barker in 1981. In 2004, the parties entered into a written agreement (the Agreement). Clause 6 of the Agreement provided for termination by four weeks’ written notice by either party. Clause 8 of the Agreement provided for compensation payable on termination in the event that Mr Barker’s position became ‘redundant and the Bank is unable to place [Mr Barker] in an alternative position with the Bank … in keeping with [Mr Barker’s] skills and experience’.

In February 2009, the Bank decided to make Mr Barker’s position redundant. On 2 March 2009, Mr Barker was informed of that decision. Mr Barker was also told that the decision was not related to his performance, but that if he was not redeployed within the Bank, his employment would be terminated approximately four weeks thereafter. Mr Barker was required to work out the day, clear out his desk, hand in his mobile phone and not return to work. His access to his Bank email account, voicemail and intranet was terminated.

After 2 March 2009, the Bank attempted to contact Mr Barker in relation to redeployment opportunities via email. However, those emails were sent to his Bank email account and so they did not reach Mr Barker in a timely fashion.

On 9 April 2009, Mr Barker’s employment was terminated by reason of redundancy and he received retrenchment payments of approximately $180,000.

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