Do your letters of Offer & Contracts protect you against your own policies? (High Court to rule on “mutual trust & obligation”)

The importation of policies into the employment contract has been the subject of breach of contract litigation for some years now (eg “Riverwood v McCormick” and “Nikolich v Goldman Sachs JB Were Services Pty Ltd”) ending badly for employers with six figure sum pay-outs.

It would appear that the next “implied” term to be tested in contracts of employment is the tenet of “mutual trust and confidence”.  Originating from the UK, this common law term provides “that an employer, without reasonable and proper cause, cannot conduct themselves in a manner calculated or likely to destroy of seriously damage the relationship of confidence and trust between the employer and employee”.

The High Court on 6 April 2014 heard submissions on this point in Commonwealth Bank of Australia v Barker.  Barker (the employee) had already received successful judgements through the Federal Court and Federal Court Full Benches to the tune of some $317,000.  This case related to a redundancy and the CBA failing to utilise its redeployment policy provisions (despite the policy manual excluding the contents from the employment contract).

The High Court’s fundamental task is to determine whether the UK provision has relevance to Australian employment law.

If the CBA appeal is successful then organisations should seek advice on suitable wording for contracts of employment that will protect them from such claims.

Greg Reiffel Industrial Relations & Human Resources Consulting has been providing the following services to businesses for over 30 years:


  • General HR and IR advisory service.
  • Fair Work Commission representation (eg unfair dismissals, adverse actions, etc.).
  • Workplace investigations and mediations.
  • Policies and procedures.
  • Discipline & Termination.
  • People Audits (are you at risk of prosecution?).
  • Enterprise Agreements, Contracts of Employment, Individual Flexibility Agreements.
  • On-site HR services.

Contact Greg on 0438 906 050 or mailto: