Employment contracts and implied terms and conditions

At common law, there is no implied obligation upon an employer not to treat an employee unfairly. However there is a common law implied obligation upon an employee not to engage in conduct which “impedes the faithful performance of his (or her) obligations or is destructive of the necessary confidence between employer and employee”

“First, there was plainly a valid reason for the dismissal (s 387(a)). Ms Lucisano’s contention that she owed no duty of good faith to the company is wrong. The supporting footnote for this proposition in Ms Lucisano’s written submissions is a reference to a passage in Walker v Citigroup Global Markets Pty Ltd 4, where Kenny J stated that ‘no duty of good faith is implied into employment contracts’. However, as the context makes clear, her Honour was referring to, and rejecting, a proposition that the general law imposed a ‘duty of procedural regularity or fairness’ on an employer’s right to terminate a contract.

In Barker, the High Court rejected the proposition that under the common law of Australia there was a term of ‘mutual trust and confidence’ to be implied by law into all employment contracts, which prevented an employer from doing anything likely to seriously damage the relationship of trust and confidence without proper cause. However, the Court endorsed the long-established principle that employees are subject to a duty of good faith to their employer. French CJ, Bell and Keane JJ noted that an employee ‘has an implied duty of fidelity to the employer not to engage in conduct which “impedes the faithful performance of his obligations or is destructive of the necessary confidence between employer and employee.”’ 5

Lucisano v Fictiv Pty Ltd- [2020] FWC 6045 delivered 11 November 2020 per Colman DP