The legal concept of trust and confidence in employment law

Although the High Court of Australia has rejected the implication of a mutual condition of trust and confidence as an implied term of an employment relationship ( see https://fairworklegaladvice.com.au/to-act-in-good-faith-an-implied-term-of-employment-contracts/), the concept is still regarded as very important in Australian employment law in other ways. For example, the reinstatement of an unfairly dismissed employee will not ordinarily be ordered by the Fair Work Commission as an unfair dismissal remedy unless the parties will be able to work with mutual trust and confidence.

“In Thinh Nguyen and another v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australian Chapter45 the Full Bench conveniently summarised the approach required as follows:

“[27] The following propositions concerning the impact of a loss of trust and confidence on the question of whether reinstatement is appropriate may be distilled from the decided cases:

  • Whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is appropriate but while it will often be an important consideration it is not the sole criterion or even a necessary one in determining whether or not to order reinstatement.
  • Each case must be decided on its own facts, including the nature of the employment concerned. There may be a limited number of circumstances in which any ripple on the surface of the employment relationship will destroy its viability but in most cases the employment relationship is capable of withstanding some friction and doubts.
  • An allegation that there has been a loss of trust and confidence must be soundly and rationally based and it is important to carefully scrutinise a claim that reinstatement is inappropriate because of a loss of confidence in the employee. The onus of establishing a loss of trust and confidence rests on the party making the assertion.
  • The reluctance of an employer to shift from a view, despite a tribunal’s assessment that the employee was not guilty of serious wrongdoing or misconduct, does not provide a sound basis to conclude that the relationship of trust and confidence is irreparably damaged or destroyed.
  • The fact that it may be difficult or embarrassing for an employer to be required to re-employ an employee whom the employer believed to have been guilty of serious wrongdoing or misconduct are not necessarily indicative of a loss of trust and confidence so as to make restoring the employment relationship inappropriate.

[28] Ultimately, the question is whether there can be a sufficient level of trust and confidence restored to make the relationship viable and productive. In making this assessment, it is appropriate to consider the rationality of any attitude taken by a party.”

Given the potential remedial benefit of reinstatement in the circumstances of Mr Johnson, it is appropriate to assess the basis upon which that course of action is opposed within the framework provided by the decisions outlined above, along with other considerations bearing upon this discretionary judgment.

In this case, I have, in effect, found that the application of the relevant WHS policies and the maintenance of appropriate discipline within BHPB are important. The impact of a potential reinstatement, together with any associated orders and actions that might be taken by the employer in that regard, is also important.

The nature of the misconduct and the context in which it occurred as set out earlier in this decision are also important considerations. These should also be considered along with the mitigating factors that have led to the finding that the dismissal was harsh and these reinforce the remedial benefit of reinstatement in the circumstances of Mr Johnson to some degree. These include the direction given by his Supervisor and the nature of his actual conduct, his long service, the impact of the dismissal and his circumstances more generally.

I have found that a valid reason for dismissal existed but, on balance, termination was harsh given the all of the circumstances. In some such situations, an order for reinstatement might be appropriate as it is capable of directly addressing the impact of the dismissal.

However, each case must be considered on its own facts and there is no automatic relationship between the findings on merit and remedy.46 In this case, I have found that the application of the relevant policy and the maintenance of appropriate discipline in connection with WHS matters within BHPB are very important. Further, the fact that Mr Johnson has not shown any real appreciation of his conduct or contrition, including during the hearing of this matter, leads to genuine concerns about whether reinstatement is appropriate. This must also be considered in the context of the changing environment within BHPB in relation to safety compliance. I am satisfied that there is now a rational basis for the loss of trust and confidence contended by BHPB given all of the evidence before the Commission. This must be considered along with all of the above circumstances to ensure a fair go all around.47

Despite the potential remedial benefit of reinstatement to Mr Johnson, I am satisfied that an order of that nature is inappropriate in this case.”

Johnson v BHP Billiton Group (2017) FWC 4097 delivered 31 August 2017 per Hampton C