The Duty to Act Fairly and Reasonably - Essay Example

Introduction The duty to act fairly and reasonably is a term used to define the nature of relationship between the employee and the employer. The term has been used in both the UK and Australia in determining cases affecting the relationship between the employee and employer. As the doctrine states, there is need for the employer to act fairly and reasonably towards the employee and the employee is also expected to do the same towards the employer. In this discussion, a case where the doctrine has been implied in Australia is going to be demonstrated in order to shade light on how the doctrine has been in use. The merits and the demerits of the doctrine for both the employee and the employer are also going to be discussed in this analysis. The rationale for this is to demonstrate the Australian position in relation to the duty to act fairly and reasonably. How mutual trust and confidence (duty to act fairly and reasonably) is implied in employment contract in Australia Stewart (2011, p. 231) the English common law recognizes the requirement to be ‘good and considerate employer’. In Malik v BCCI (1998) case the House of Lords state that it is an obligation not to do actions that can derail the elements of ‘trust and confidence’ in employment relationship. From the recent judgments, it has been simply referred to as the duty to act fairly or in good faith. This seems to effectively capture the breadth of the concept. It has been described and accepted in Britain as a term to be implied by the law into all employment contracts. On the contrary, the existence of this duty has not been definitively accepted by higher courts in Australia or at least not in a case in which the point was at issue. Majority of the lower courts judges have endorsed it. In essence, it has been stated or assumed to exist by a number of lower court judges. This is evident in the case of Deloose V Healey (2007) and Russel v Roman Cathalic Church (2008). In the recent years, it was mentioned without disapproval by four High Court judges in Koehler v Cerebos (2005). More so, a number of Federal Court judges have critically questioned whether such a term should be implied Ban Efferen v CMA (2009) (Ameresekere 2011, p.231). In another case, South Australia v McDonald (2009), the Supreme Court of South Australia accepted the term should be in principle is implied in order to restrain abuse of employer’s power. It however found that there was no scope to do so for an employment relationship which is already heavily regulated by legislations or industrial instruments that provided for resolution of grievances. The employee here was a teacher in a government school and as such subject to special public sector legislation. On the other hand, the reasoning in McDonald could likely be applied to any employment covered by an award or enterprise agreement. In the case where the duty has been found to exist, there are a number of breaches identified which include the following cases (Braham 2007, p34). Making unjustified accusations (evident in the case of Hem v Cant (2007)) Insisting that an employee should go through a mental examination process merely because another employee complained about the (Bliss v SE Thames RHA (1987). Abusive and bullying behaviour in a workplace environment, this is demonstrated in the Horkulak v cantor Fitgerald (2004). Declining to investigate reasonable concerns by employees, this is evident in the case of British Aircraft v Austin (1978). Demoting an employee without reasonable evidence of breach of contract or a sound basis on their return from maternity leave as evident in the Thomson v Orica (2002). Arbitrarily declining to offer employee certain benefits which are made available to other workers. This is evident in the case of ITransco v O’Brien (2002) (Stewart 2011, p. 231). In the case of Malik v BCCI the House of Lords accepted that the duty could be breached by running a dishonest or corrupt business and hence prejudicing the career prospects of innocent workers. Notably, the need to act fairly and reasonably is implied in Australia as evident from the cases identified (Goode & Goode 2011, p.998). The term implied does not mean that such terms should be written in a contract for them to be enforceable but must meet certain criterion which includes: It must be equitable and reasonable. It must be essential to give business ethicacy to contract so that no term will be implied if the contract is effective without it. It must be obvious or easily perceived in order to eliminate controversy or debate. It must be precise in expression and It must not contradict any of the expressed terms of the contract. These qualifications of the implied terms are difficult but important as there would be no other reasonable way that the conflicting parties could have settled their case in a court of law. In Australia, this duty is an obligation to both the employer and the employee as the employee is required to be faithful, obedient and must demonstrate care and skill to their employer. This is balanced employers who need to act reasonably and fairly to all its employees. There are duties for both the employer and employees (Goulding 2002, p. 23).The employee’s duties are: obedience, fidelity, skill and care. The employer has the mandate of giving order to employees and expects them to be obeyed. The duty of fidelity is coupled with a number of obligations imposed on employees whilst in still employed by the employer. They must server their employer reasonable and in good faith, they are also required to protect their employer’s interests, not commit to secret profits at the employers expense and they are also required not to disclose any confidential information of their employer nor use their employer’s time for their own selfish-serving purposes. As employees, they are expected to undertake their tasks and achieve standards of skill and competence that are reasonable and expected by of someone of their experience and training. This also includes not to unreasonable cause damage or injury in the course of their duties (Joellen 2012, p. 12). According to Tuunanen, Windsperger, Cliquet (2011. P.233) the employers on the other hand have duties, under the implied duty to act in good faith and fairly. The employer is expected to provide a sound and safe working environment to all employees, a duty to provide work for the purposes of employment contract and the duty to be an employer of sound conscience. As noted, this is an emerging doctrine especially in Australian courts. The doctrine has been accepted in the United Kingdom. However, no senior appeal court in Australia has stated that the doctrine if trust and confidence is part of the existing employment law. It is however likely that such doctrine will be accepted in some form. As an example, there is a prevailing authority in Australia addressing similar duties such as employer breaches the employment contract to act in good conscience and in good faith to employees where the employer has arbitrarily declined the employee some essential benefits provided to other employees and where the employee is dismissed or demoted without sound basis especially upon return from maternity leave (John & Ingrid 2007, p. 49). International case law influence on Australian position International case law has influenced Australian position in a number of ways. The United Kingdom specifically has influenced most of the legislations and statutes of Australia; the Common Law is an example of this. In the UK the duty to act fairly and reasonably has been accepted and used in determining cases relating to employee and employer relationship. In R v Panel (1987) it was established that failure to observer the basic riles of natural justice, best described as breach fundamental failure amounted to breach of natural justice. In this case, the United Kingdom views the doctrine as required in determining the extent to which fairness has been done in workplace. According to Longley & James (2002, p.231) the integration of the doctrine in the United Kingdom is the reason why the Australian legislation has allowed the use of the doctrine in determining cases relating to workplace especially in the lower courts and some higher courts where the doctrine has been mentioned without being opposed. Advantages for employers having the term of mutual trust and confidence implied in employment contract As much as the law protects the employees, it also protects the employers from fraudulent activities from employees. Employees are expected to be sincere, competent and act in good faith and with the interest of the employer in heart. This is a major advantage on the employer’s side as cases of leaked information, fraud and other activities that negate employer’s position will be discouraged (Smith 2013, p.122). In the event that an employee is found to have breached the duty of mutual trust and confidence, the employer may dismiss the employee on these grounds without breach of employee’s rights. Upon such dismissal, it is the burden of the employee to prove otherwise in the court of law. Like any relationship, mutual trust and respect is vital, to the employer, having such a doctrine means that the employee will diligently perform his or her duties in workplace without involving in selfish or personal duties while working for the employer. Disadvantages for employers having the term of mutual trust and confidence implied in employment contract Employers are bound by the law to oblige to the terms of the contract offered to its employees. This is a limitation in employers wishing to maximize on the cost of doing business in order to achieve maximum profits. Since the employer is bound by the restrictions of ensuring a sound and safe workplace, the cost of achieving this is high and the failure of ensuring the same will cost the employer (Loots & Charrett 2009, p.211). The doctrine also provides that the employer needs to act with sound conscience and be fair in workplace. This is a disadvantage since the appraisal system in place could disadvantage some employers who may not be hard working and hence not delivering what is expected of them. If other employees are promoted, cases of unfairness among the employees may arise, this is a costly process as justifying if the employer is right or wrong is costly in terms of time and money. More so, the employee is expected to perform to the best of their ability, this may not be the case and determining the performance level of every employee is a difficult task. Employees may also take advantage of the provision and actually illegally enrich themselves using the employer’s name. The main disadvantage in this case is the fact that the burden of proof is upon the employer (Mark 2008, p.23). In some cases, mothers from maternity leave may not be as productive as others; the employer is however bound by the doctrine and hence will not be able to dismiss such employees on the ground of unproductiveness after maternity leave. This may disadvantage the company but the employer will have limited options other than to keep the employee despite the declined performance level. Advantages for employees having the term of mutual trust and confidence implied in employment contract Employees benefit from the implied term in a number of ways, firstly, they are protected from fraudulent employers who may take advantage of them in order to achieve their goals. Employees have the right to sound workplace environment and being given responsibilities to undertake. Having a safe workplace environment is therefore a major advantage since the employees will not have to bother with safety responsibilities in their workplace. More so, the burden of duty allocation is also transferred to the employer and hence living the employee with the execution process. Given the dynamic nature of the work environment, employees are better protected by the doctrine and hence will not lose their jobs easily. This is specifically important for mothers from maternity leave. Employers naturally have the tendency of dismissing employees they tend to be unproductive (Riley 2005, p.123). Young mothers are normally the casualties and hence the importance of the doctrine in protecting their sources of livelihood. Generally the doctrine of fairness decreases employee’s possibilities of job loss and assurance of sound working environment free from discrimination. Disadvantages for employees having the term of mutual trust and confidence implied in employment contract Despite the advantages of the doctrine of mutual trust and confidence to the employees, they are also bound by the doctrine to ensure obedience and faithfulness to the employer. This is a clear line of responsibility given to employees. The disadvantage of this is the need to ensure faithfulness and obedience to the employer lest they lose their jobs. More so, the employees of the company have the obligation of ensuring that they perform well in order to their survival since they are required to meet their training and skills levels as well as maintaining competence. This is a major disadvantage because employers may take advantage of the employee’s poor performance to dismiss them. In the event that the earnings from employment is not adequate to cater for employees needs, the employee is not allowed to use the business hours to work on other alternative options of getting money (Russo 2013,p. 257). This is a major disadvantage because the employee’s hands will be tied to the responsibilities given by the employer. Time to time, ensuring competence in workplace requires training and hard work for employees. Since the doctrine requires the employees to ensure competency in workplace, the burden of further studies and training may disadvantage the employee because of the cost and time invested in further training process. Conclusion As discussed in this analysis, the doctrine of mutual trust and confidence has been implied in the Australian government. This is evident from the cases handled by lower courts in the country as well as the mention of the doctrine without any contradiction of the existing law. The doctrine has clearly been implied and used in a number of cases. In the UK, the doctrine has been integrated into all levels of legislations and employed in determining the fairness in many cases in the country. The doctrine gives both the employer and the employee responsibilities in their relationship, the employer is expected to give sound working conditions and allocate fairly responsibilities and benefits to all its employees without favoring others. The employer is also not expected to discriminate any employer especially in relation to maternity commitments. On the other hand, the employee is expected to obey and be faithful to the employer. The employer is also expected to demonstrate high level of competency expected from the training and skills that the employee possesses. The employee is also expected to protect the interest of the employer by keeping the company’s confidential. The employee is therefore expected not to act selfishly while working for the employer by not using the employers name to achieve gains that could otherwise be given to the employer. This gives both advantages and disadvantages to both the employee and the employer and hence binding them towards fulfilling their part of the bargain. References Ameresekere, NS 2011, Un Convention Against Corruption to Combat Fraud and Corruption: A Cancerous Menace with Mere Rhetoric Subverts Un Convention, AuthorHouse, Sydney. Pp. 230-235. Braham, D 2007, Mordy Bromberg and Mark Irving (Eds), Australian Charter of Employment Rights, The Economic and Labour Relations Review : ELRR, Vol. 18, No. 1,pp.34-45. Goode, R & Goode, RM 2011, Principles of Corporate Insolvency Law, Sweet & Maxwell, Sydney. Pp. 998-1010. Goulding, S 2002, Company Law, Cavendish, Sydney. P.23-34. 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