Implied Mutual Trust and Confidence - Case Study Example

Title: Implied Mutual trust and confidence Name: Tutor: Date: Introduction The issue of relationship between employer and employees has raised a lot of concern in the employment relationships and contracts. In respect to the history of employment, much has been done in order to improve on how employers relate with their employees. During employment, an employer is too subject to certain implied conditions just as his employee will do1. The key condition to the employer is the implied term of mutual trust and confidence, which from the dimension of the obligations imposed to the employer, has been presented as a commitment to the employer without any cause may cause to destroy the mutual relationship of trust and trust that will exist between the employer and employees. Implied term of relationship between employer and employees has since been reformed. Academically, Relationship between employer and employees has got attention since scholars has considered it to play a key role in the employment law, it is also commands the movement of modern law in terms of employment law and finally, it is the backbone of contract of employment. A greater number of scholars have focused their concern on the juridical nature, content and the sources of implied term of mutual trust and confidence. It will be actually fair to criticize the fat that few academicians have placed their concern on the parameters of the traditional implied terms of the employer and specifically the duty to look after employees’ welfare. This will assist employees if the employer is not willing or has forgotten duties accorded in the common law. Although there are situations where the two implied terms overlap, the judges are required to take their time before they rule out their judgment. There is a view that implied term of relationship between employer and employees be developed so as to accommodate the traditional implied terms. If the process comes to pass, implied term of relationship between employer and employees will be considered super-principle and will be able to cushion traditional forms of implied duties of employers thus settling the whole issue of implied duties. There are two possible issues that are said to take the overall duty on the implied terms in order to ensuring that employees are well taken care of in terms of safety and reasonably working conditions. First is the time and place of overarching principle.2 Australian view on implied term Illustration: Commonwealth bank v Mr. Barker Recently, the federal court made a significant ruling in the case of CBA vs Baker of 2013 FCAFC 83. In its conclusion, it indicated that there exist a relationship between employer and employees in all employment contracts that are available in Australia. Terms have been in case one seeks damage for breach of contract3. Relationship between employer and employees according to employment law of Australia is where the employer and the employee will not destroy their relationship unless there is a reasonable doubt. Additionally, implied terms states that the working conditions of employees should be favorable and on the other hand, employees should be productive to improve on their mutual trust and confidence4. It has been evidenced that Australia has an implied term of relationship between employer and employees in employment contracts basing on a decision that was made by the federal court recently. The decision seems to have been supported by majority of Australians. In his remarks, the primary judge noted that the common law in Australia has been accorded much authority and that is the reason why implied term does exist. Employment relationship in Australia is still undergoing evolution according to one of judge’s observations5. Case facts Mr. Barker has been an employee of Commonwealth bank for a very long time and had never been involved in any unethical acts during his tenure. During his employment, the bank had included a clause that will compensate Mr. Barker incase his role will at some point become redundant and the banks was not able to redeploy him. There were no implied terms in his contract letter. The human resource manual of the bank had an inclusive of redundancy policy setting that clearly illustrates how one will be redeployed and a declaimer that informed employees that it had no effect to the employment contract that was issue at the day of employment. In March 2009, Mr. Barker got a notification that his job had become redundant and he was to be redeployed6. Everything became fast to an extent that he was informed by the management to make clearance on his desk as soon as he could. His accessibility to company e-mails and other facilities were now a go zone. From what had transpired, Mr. Barker did not report to work for a month, and that is when he received a letter telling him that his he had been terminated because position had become redundant. In response, Mr. Barker went ahead to claim against his employer, according to Mr. Barker’s claim, the Commonwealth had breached their employment contract. Implied term of relationship between employer and employees has since been reformed. Academically, Relationship between employer and employees has got attention since scholars has considered it to play a key role in the employment law, it is also commands the movement of modern law in terms of employment law and finally, it is the backbone of contract of employment Primary judge’s decision Admitting that implied term of relationship between employer and employees had been enshrined in the common law, Beskano J, primary judge in his examination realized that the bank had breached employment contract that Mr. Barker had been employed on. The primary judge further ruled that the redundancy policy was not a term of Mr. Barker’s employment contract. The judge held that because redundancy policy was not inclusive during Mr. barker’s employment, as per the disclaimer available in the human resource manual, the bank seemed to have failed and had breached employment contract against Mr. Barker. In relation to this therefore, the judge ordered the commonwealth bank to reward Mr. Barker AU$300,000 for the damages caused as a result of his termination from employment being that his position was redundant7. Appeal Since the bank was not satisfied, they appeal on the findings of Beskano had used to rule out his judgment; that there was an implied term of relationship between employer and employeeswhen Mr. Barker signed a contract with the commonwealth bank. He further indicated that the bank had failed to honor its own policy by breaching the same implied term8. The appeal requested by the bank was rejected by a three bench judge of Full Federal Court. The judges confirmed that there was an implied trust and confidence in Australian employment contract. The decision applied was much different from that given by primary judge Beskano J; in addition, the bank was also accused of having breached a second contract which was the duty of cooperation. Decision of the majority – Jacobson and Lander Many have held that implied term of relationship between employer and employees had reached a point where everyone could recognize and accept it. Through the development of mutual contemporary employment, implied term is considered a necessity9. Majority did not concur with Beskano’s findings that the breach of contract by the bank arose because assumed the conditions stated in the redundancy policy. The three judge bench revealed that once implied term has been accepted then it outcome will fully rely on the situation thereby10. In the case, the following considerations were made; 1. Bank’s corporate nature 2. Employment term of Mr. Barker (27yrs); and 3. Reference to employment contract issued to Mr. Barker during his employment Basing on this situation, the majority established that implied duty of relationship between employer and employees demanded commonwealth bank to first take a step and consult Mr. Barker on whether there was another position that Mr. Barker could fit in so that he could apply instead of terminating him from his employment that he has worked for a very long period of time. Majority also considered the duty of cooperation as another alternative that came out as a result of analyzing the findings on implied term on mutual trust and confidence. Duty of cooperation is applicable to all contractual relationships. It is defined as the principle that requires both parties of the contract to comply with the necessary so that the other will feel the benefit of the contract. The majority continued to state that, the failure of the bank to take correct steps in ensuring Mr. Barker gets a job or is informed earlier so that he can secure himself another employment before he is terminated11. Dissenting decision According to one Jessop J, no consensus in the Australian common law to allow for the existence of implied term of mutual trust and confidence. He claimed that if implied term of relationship between employer and employees is introduced then the law of contract will be boosted beyond limits and development in duty of cooperation. Jessop undertook a thorough research on the cases in Australia and the entire Europe and concluded that implied term of relationship between employer and employees was not suitable to Australia12. In his argument, Jessop stated that in a situation where an employer has breached a non-contractual policy then it will not be placed as under implied trust and confidence. Although Jessop faced some challenges in presenting facts to support his argument in some circumstances, he laments that if the obligations are identified to be ended then it can be termed implied term. He reasoned out that implied term do not demand for an employment contract in the first place in order to be validly employed. Jessop also raised some concern on where and when to apply implied term of trust and confidence in respect to employment context13. People continue to show mixed reactions on whether implied terms should be put into practice but basing on the two bench judge comprising of Jacobson and Lander, the decision actually demonstrated that it is recognized and should be put into practice. The decision of majority clarified on four crucial issues on implied term in Australia. 1. Since implied term is still at infant stage, the kind of employment relationships that will coexist will determine its effectiveness. 2. In a situation where an employee is dismissed from work due to concrete reasons, the implied term will not be applicable. This has brought some row as it may seem complicated when related to that of Mr. Barker and that of dismissal as it is almost similar. 3. Where implied term has been expressly excluded, then it will not be termed implied or when it is not consistent with the express terms of the employment contract. 4. If one breach implied term the consequences will be equated to the damages caused thereby and is similar to breach of contract. Breach of implied term and what company policies play According to the majority, there was a breach of implied term by the bank because they did not considered a possibility of redeploying Mr. Barker or giving him an opportunity to apply for another alternative position within the premise14. Application of the decision From the case of Commonwealth v Mr. Barker on implied term of mutual trust and confidence, a number of points were collected; First, the decision illustrated that the Australian courts recognized the existence of implied term to be binding thus providing answers such as all employment contracts will be implied as stipulated in the common law. On a rare case, the high court may consider reviewing the dissenting judgment. The scope and nature implied term will be determined basing on the employment relationship that coexists between the employer and its employees. Breach will not be considered on the grounds that a company has set out policies which are not part of employment contract15. Finally, the decision of the majority seems to claim that both parties can contract out basing their agreement on implied term through express language. On this other hand, this argument was considered a mere issue since it was in contrast of Justice Rothman’s decision. In considering relationship between employer and employees in the context of lawyers, they find it useful and also convenient during research. However, there may be aspects of relationship between employer and employees that may be misleading hence causing express breach of contract on the duty of mutual trust and confidence16. There is confusion that has emerged between duty of good faith and duty of trust and confidence. Duty of good faith is an implied duty that defines term of contract and relationship enshrined in it while relationship between employer and employees is the relationship that exist between and employer and its employees. Dealing with the two terminologies may be confusing to scholars especially when dealing with mutual trust and confidence. The nature of employment raises complex issues on this matter. It is suggested that in order for a mutual relationship to continue, then thorough maintenance ought to be done to ensure strong bond between both parties. In relation to this case therefore, a duty to maintain the relationship policy should be formulated at the course of employment17. Scholars have doubted on whether relationship between employer and employee’s relationship existed in the past and whether it can continue to exist in the future between employer and their employees. As a matter of fact, there are many cases that have been ruled in a number of judgments available in the local journals. Criticisms continue to be raised on whether such relationships do exist or are only available in theory form18. In order to manage the risk of relationship between employer and employees being implied, employer should consider including an express term which not applicable in the long run. This step is not an assurance to all the employers because they are not certain on how their relationship with their employees will be carried19. Relationship between employer and employees has got attention since scholars has considered it to play a key role in the employment law, it is also commands the movement of modern law in terms of employment law and finally, it is the backbone of contract of employment. A greater number of scholars have focused their concern on the juridical nature, content and the sources of implied term of mutual trust and confidence20. The critiques the fat that few academicians have placed their concern on the parameters of the traditional implied terms of the employer and specifically the duty to look after employees’ welfare. This will help employees if the employer is not willing or has forgotten duties accorded in the common law. Although there are situations where the two implied terms overlap, the judges are required to take their time before they rule out their judgment21. In confirming the existence of an implied trust and confidence in Australia, it does not mean that fiduciary relationship will be created between the two parties. Basing on Mr. Barker’s case, employers have begun thinking on how they can review their employment contracts in terms of wordings and interpretation of their contract of employment22. The Australian courts have clarified on the existences of implied term of relationship between employer and employees yet its application is not yet certain. The courts realized that the implied term must be formulated in order to make employers comfortable with the terms23. Works Cited Alibekova, Antonida, and Dennis Campbell. 2007. Employment law. Alphen aan den Rijn, The Netherlands: Kluwer Law International. Anderson, G. J. 2011. Labour law in New Zealand. Alphen aan den Rijn, The Netherlands: Kluwer Law International. Aras, Güler, and David Crowther. 2010. A handbook of corporate governance and social responsibility. 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