Implied Duties of Faith, Trust and Confidence

By Chris Barton and Amy Murrell

A duty of mutual trust and confidence will be implied in employment contracts, according to a decision by the NSW Supreme Court.

This is the first time a superior court has found that there is an implied duty of good faith and an implied duty of mutual trust and confidence in a contract of employment. The decision is not binding it could be followed by other courts across Australia. The authors feel the decision is important because it highlights the possibility that acts done by an employer in the course of employment can be reviewed by the court on the basis that the conduct is inconsistent with the implied duties of good faith and mutual trust and confidence.

The case was between the trustees of the Roman Catholic Archdiocese of Sydney and Mr David Russell who sought damages for a breach in his employment contract. The court held that no damages resulted from the extent to which these implied duties were breached but they still held that there were implied terms that they could examine.

Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor [2007] NSWSC 104 (19 February 2007)

(CCH Work Alert; issue 3, 23 April 2007; p 9-10)