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Time and time again employers have gotten themselves into hot water because they have failed to appreciate that the obligations they owe to their workers stretch past the employment contract. The employer-employee relationship is not and cannot be confined to neatly drafted contractual clauses. Implied duties are imposed upon the relationship by law and under statute. One such duty that the law imposes is the implied duty of mutual trust and confidence. The duty is multifaceted, containing a range of responsibilities that the prudent employer must be made aware of, lest they too fall into trouble.

The implied duty of care – a working definition.

The implied duty of mutual trust and confidence at its centre holds that the employer must not do anything that is calculated or likely to destroy the relationship between himself/herself and the employee. The duty is broad enough to encompass both active intention and negligence on the part of the employer. In this respect the duty is an onerous one because it may be breached though mere carelessness.

Contracting out of the duty

The implied duty of mutual trust and confidence cannot be contracted out of. It cannot be excluded or modified under the contract of employment, collateral documents or via a verbal arrangement.

Specific examples

The implied duty of mutual trust and confidence has been breached in many circumstances. Some of the more prominent examples include:

  • Intentionally mistreating an employee in the hopes that they will quit;
  • failing to take care for the health and safety of workers;
  • establishing business policies and procedures to the detriment of workers,
  • sexual harassment by an employer;
  • bullying and excessive workloads;
  • relocating employees in a capricious and unjust manner;
  • giving an employee unjustifiable warnings in respect of their work performance; and
  • running a business in a dishonest and corrupt manner, resulting in the employees being unable to find subsequent work.


As wide spanning as the implied duty of mutual trust and confidence may be. There are three major limitations or situations where the rule will have no application.

First of all, the rule does not apply to cases of dismissal. That is an employer is not obliged to act in a manner that promotes mutual trust and confidence when terminating an employees engagement.

Secondly, the duty cannot be said to have been breached in circumstances where the employer-employee relationship has already suffered an irreparable breakdown. That is, the duty cannot apply where there is no more relationship to protect.

Lastly, if the employer acts in a manner that breaches the duty, but does so on reasonable grounds and or with proper cause, this will be permissible. An employer will not be required to disregard his or her own legitimate interests, especially when to do so would be highly unreasonable or dangerous. I.E. an employer can suspend an employee without affording him the suspension procedure under the contract of employment, in circumstances where the suspended employee’s actions are placing others at risk.


Would you like to know more about the implied duty of mutual trust and confidence or other employment law matters? Contact us on 1300 544 755 and one of our highly trained employment lawyers would be happy to assist you with your enquiries.


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