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  • Print publication year: 2017
  • Online publication date: August 2018

Chapter 2 - The employment contract: implied terms

Summary

Introduction

In Chapter 1 we established the nature of a contract and how to distinguish between a contract of employment and an independent contract. The terms of an employment contract set out the various rights and duties of the employer and the employee.

In addition to the express terms in an employment contract, there are implied terms. These are duties and obligations imposed on the employer and employee under the common law. They are based on public policy or originate from the nature of the contract of employment (for example, between master and servant). Duties implied by common law can be imposed on the employee or the employer or they can be mutual obligations. In Australia at present, there is much debate about that latter group.

In the 2014 High Court of Australia decision in Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 (Barker (2014)) the court did not imply a mutual duty of trust and confidence into the employment relationship flowing from the employer to the employee. As will be seen throughout this chapter, debate as to whether there is a reciprocal duty of good faith continues. Further, issues arise as to the interconnection between work, remuneration and strikes. So it is with those reciprocal duties that this discussion begins.

No work, no pay – work earns remuneration

That workers are entitled to earn remuneration, whether it is by way of wages or salary, for work they perform was confirmed by the decision in Automatic Fire Sprinklers Pty Ltd v Watson. The employee's duty to render services and the employer's duty to pay wages may seem straightforward, in that if services are not rendered then wages may not be paid. However, there are several issues arising from this seemingly simple interdependent duty.

For example, there is a question as to whether it is justified for employees to extract wages, based on the employer's duty to pay wages, during lawful industrial action such as a go-slow or a work-to-rule. Chapter 5 of this book deals with industrial action and limits on payment of salary to workers who strike under the Fair Work Act 2009 (Cth). But there are difficulties in practice.

In a go-slow, work is performed, but at a very slow rate. In a work-to-rule, work is performed, but only to the letter of the contract of employment.

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