The common law has traditionally viewed this obligation as a duty on the part of employer and employee to refrain from conducting themselves in a manner that is apt to destroy or to seriously damage the relationship of trust and confidence between them. It has been characterised as “a duty, on both employer and employee, to act in the best interests of maintaining trust in the relationship.” An employer may still be able to terminate the employment contract if it is necessary and appropriate to do so; however, it remains necessary for both parties to act with “prudence, caution and diligence”. In other words, the duty is owed to the employment relationship itself rather than to the other contractual party.
At the time of writing (it has been appealed by both sides, and judgment is awaited) the most recent major development in this area was in the matter of Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor. Russell was Director of Music for the choir of St Mary’s Cathedral in Sydney. He had worked for the Cathedral for many years in various music-related roles. No written contract of employment ever existed, but his role appeared to have evolved as a result of several discussions with the Cardinal. In the course of his employment, Russell was required to be in frequent contact with students of St Mary’s Cathedral school.
Years before, an individual who worked at the Cathedral, presumably being unable to afford to pay rent, was living in the Cathedral Presbytery. The Church considered this to be inappropriate, and so Russell offered to let him stay at a room in his house, which offer the employee accepted.
In 1999 Russell was arrested and charged with sexual misconduct arising from the evidence of former members of the Choir. His flatmate was also arrested. The majority of the allegations were directed at that person, but one was directed at Russell. The other person was convicted of an offence. During this time, Russell stood down from his position as Director of Music. The criminal proceedings against Russell were dismissed. Russell then resumed work.
The Dean of the Cathedral subsequently received a letter from the NSW Ombudsman’s Office giving notice that the Office was going to investigate the handling of and decisions made concerning, “child protection issues associated with Mr Russell’s current employment” among other matters. Soon after the Dean told Russell that the Church was needed to file a report on his case, and so “we have to do an investigation to satisfy this requirement.”
The Church then appointed an investigator to determine whether there were “grounds for concluding, on the balance of probabilities, that the complaint is justified – either in whole or in part?” This ‘complaint’ was in fact the criminal conduct of which he was acquitted. Russell was then invited to attend a meeting concerning the investigation.
Russell had requested further information concerning the investigation several times, but had not received it, and now wrote to express his concern at the lack of information given to him to enable him to prepare for the meeting. He was dismayed that he was not informed of what Church protocols were governing the investigation, whether he would need legal representation, what the past experience of the investigator consisted of, whether the meeting was confidential to any other parties besides the Ombudsman’s Office, and whether minutes would be taken.
The Church responded to some of these queries but was unable to provide further information.
At the meeting, a number of matters relating to the complaints against Russell and his former flat mate were discussed.
Russell later provided written submissions to the Church in which he denied all allegations of assault. He
also submitted that the investigative proceedings were “a denial of natural justice and procedural fairness” because he was not given the opportunity to respond to some of the allegations made against him. When his employment was terminated, he took the matter to the Industrial Relations Commission and was re-instated.
He then brought an action in the Supreme Court, claiming damages being the costs of the whole matter (which had presumably been crippling to a person of modest means) based on an asserted breach of two implied terms in his contract of employment: the duty to act in good faith, and the obligation of mutual trust and confidence.
Rothman J found that Russell was wrongfully terminated by the Church, and that both the duty to act in good faith and the obligation of mutual trust and confidence formed part of Russell’s contract. In analyzing the nature of Russell’s employment which, involving as it did the extensive supervision of young boys on behalf of the Church, required his employer to have considerable “trust and confidence” in him, His Honour found that “if one sought to exclude, expressly, the relationship of trust and confidence, if it were a necessary and essential ingredient of employment, one may still have a contract, but it is unlikely to be a contract of employment.
Without trust and confidence there is no submission and subordination and no right of control. Without trust and confidence there is no contract of employment.” The unjustified termination of Russell’s employment was a breach of the duty of mutual trust and confidence that was an implied term of the employment contract. The Church has also breached the obligation of all employers and employees to act in good faith.
Despite finding that the Church breached both implied duties and had wrongfully terminated the employment, Rothman J held that the breaches occasioned no damage to Russell, and awarded him no amount in damages. The basis of that was the fact of his reinstatement by a tribunal which could not award costs.
Thus, there could be no “loss and damage” arising merely from the enactment of a statutory restriction.
Russell thus stands (pending appeal) as a precedent wherein an unfair and unjustified termination of employment may sound in damages by virtue of the fact that the unfair termination could constitute a breach of the implied duty of trust and confidence. This has opened up a potentially lucrative solution to those employees who now find the opportunity to bring an action for unfair dismissal has been removed.