Commonwealth Bank v Barker
The recent Federal Court decision of Barker v Commonwealth Bank of Australia will have far reaching consequences in the area of workplace relations. Given that redundancies are an unfortunate outcome of the current economic times, this is a reminder to ensure that you obtain proper advice before making employees redundant in your workplace.
The facts of the case are that Mr Barker was made redundant following an internal restructure. The Commonwealth Bank (“the Bank”) indicated that it was their primary intention to redeploy Mr Barker. If that were not possible, then he would be retrenched in approximately four weeks’ time. Although there was a promise to attempt redeployment, the Bank did very little to action the promise and Mr Barker was ultimately made redundant.
Mr Barker brought a number of claims including one under the Trade Practices Act which was unsuccessful. Mr Barker also argued that the Bank had breached his employment contract by failing to follow its redeployment policy prior to retrenching him.
The Bank’s redundancy and redeployment policy did not form part of the employee’s contract. This is because the policy contained an express statement that it was not to be incorporated into employees’ contracts. All policies and procedures should include such a statement.
For the first time in Australian courts, the Federal court found that a term of mutual trust and confidence is to be implied by law in all contracts of employment, unless excluded by the terms of the contract itself.
The fact that the Bank did nothing in the 4 week period to attempt to redeploy Mr Barker constituted a serious breach by the Bank of its redundancy and redeployment policy which constituted a breach of the implied term of mutual trust and confidence. This breach resulted in damage to Mr Barker, being the loss of a chance of redeployment. The Federal Court awarded Mr Barker $317,500 in damages for breach of an implied term of mutual trust and confidence in his employment contract by the Bank.
The lessons to learn as a result of this decision are:
- ensure that you obtain proper advice prior to effecting redundancies.
- ensure that policies and procedures exist, are regularly reviewed and are followed by not only your employees but also the Company.
- review and update employment contracts regularly.
Please contact Christie for any of your workplace needs.