ON 6 AUGUST 2013, the Full Court of the Federal Court of Australia delivered Commonwealth Bank of Australia v Barker [2013] FCAFC 83 (6 August 2013).

http://www.austlii.edu.au/au/cases/cth/FCAFC/2013/83.html

Barker was an executive manager in the Adelaide corporate banking section of the Commonwealth Bank. He had a written contract of employment under which the bank could terminate his contract, without cause, with written notice of four weeks.

On 2 March 2009, Barker was handed a letter advising that his position was to be made redundant but it was the bank’s preference to redeploy him and that they would consult with him with regards to his options. His email and intranet access were cancelled immediately and he was made clear his desk, hand in his keys and mobile phone, and told not return to work.

The human resources department of the bank then made a number of unsuccessful attempts to contact Barker by email and mobile phone about another position that would have been suitable to his skill set. They were not aware until 26 March 2009 that Barker no longer had access to his work email or mobile phone. On 9 April he was advised in writing that his employment was terminated due to redundancy, effective from the close of business that day.

Barker commenced proceedings in the Federal Court against the bank for breach of employment contract and damages under s82 of the Trade Practices Act 1972 (Cth). The trial judge, Justice Besanko, found that the bank had been inactive when complying with its policies following notification of redundancy and that this was a serious breach of the implied term of mutual trust and confidence which entitled him to damages.

Besanko J awarded Barker damages of $317,000 for loss of the opportunity to be redeployed to a suitable position within the bank.

On appeal, the Full Court of he Federal Court of Australia was required to consider (1) whether the employment contract contained an implied term and (2) if there was an implied term, the bank’s breach of its policies  constituted a serious breach of the relationship of trust and confidence upon which the term arose.

The Full Court majority (Jacobsen and Lander JJ, Jessup J dissenting) were of the view that even though there is no High Court authority on the issue, there is a significant degree of recognition in England and Australia for the Full Court to accept that such implied terms form part of Australian employment contracts.

The Full Court considered that the term operated after the dismissal so that the bank was required to take active steps to consult with Barker about the alternative available positions and allow him the opportunity to apply.

The Full Court consider the banks’ failure to contact Barker was unreasonable and constituted a breach of the implied term of mutual trust and confidence.

The bank has appealed to the High Court of Australia on the grounds that (1) Full Court made an error in holding that the common law of Australia contains an implied term based on a relationship of mutual trust and confidence and (2) that the Full Court made an error in finding that the implied term required the bank to consult with Barker about his redeployment options.

The appeal was heard on 8 and 9 April 2014 with the court reserving its decision. A judgment is expected soon.

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