The erosion of the implied term of mutual trust and confidence in Australian employment law

Abstract

Although the implied duty of mutual trust and confidence has long been established as an implied term in employment contracts under English common law, the Australian High Court has recently ruled that it is not part of the common law regulating employment contracts in Australia because the implication of such a term was better regulated under statute. While it is acknowledged that legislation is most effective in regulating substantive employment rights and obligations, a political climate which lends itself to ideologically divergent policy reforms often robs the discipline of its stability. However, if there exists a legal framework apart from legislation, which coheres with it and has the ability to initiate juridical development in the law, as is the role of the common law, the result will be an enrichment of the discipline overall. This paper traces selected English and Australian judicial approaches towards the implication of the duty of mutual trust and confidence in the context of terminations of employment within a statutory regime, culminating with an analysis of the recent Australian High Court decision in Commonwealth Bank of Australia v Barker (Barker), which has diminished common law’s interpretive role in this regard. Consequently, this paper aims to revitalize common law reasoning by utilizing Dworkin’s judicial interpretive method as the necessary theoretical framework.