Reinstatement and trust and confidence

One of the issues with which the Fair Work Commission is concerned when determining whether to order the reinstatement of an employee who has been found to have been unfair dismissed (which process it is compelled by the Fair Work Act to fulfil before it can consider compensation as an alternative remedy) is whether or not there is sufficient trust and confidence between the employer and employee to render this workable. Obviously in a large company, that is easier to be satisfied about than a small business where the decision maker and the employee may well work next to one another. The test which is to be applied is a practical one, as the following extract from an appeal decision makes clear.

“When the issue of an asserted loss of trust and confidence is considered in the context of the appropriateness of reinstatement, it is important to note that this does not concern the broadly-formulated implied mutual duty of trust and confidence that was rejected by the High Court in Commonwealth Bank of Australia v Barker 22, nor the narrower and long-established employee’s duty of trust and confidence23, but rather to “that which is essential to make an employment relationship workable.”24 Kiefel J (as her Honour then was) characterised the employee’s duty of trust and confidence as reflecting “… an essential aspect of the relationship between employer and employee. Whilst trust and confidence is maintained, the relationship endures”.25 It is this essential element of a viable working relationship which arises for consideration in the context of s 390. As a practical matter relevant to whether reinstatement is the appropriate remedy we consider that, while a loss of trust and confidence is usually asserted by the employer, it could equally be relied upon by an unfairly dismissed employee as a reason why reinstatement would not be appropriate and an award of compensation in lieu should be determined. Particularly in a small workplace where viable personal relationships between employees and the employer (or the employer’s personal emanation) are critical, it seems to us that a rationally-based and well-founded loss of trust and confidence in the employer on the part of an unfairly dismissed employee may well constitute a significant practical impediment to the re-establishment of a viable employment relationship.”

Seitz v Ironbay Pty Ltd t/a City Beach IGA (2018) FWCFB 1341delivered 12 March 2018 per Hatcher VP, Gooley DP and Wilson C