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Good relationships hinge on trust and confidence

30 September 2014


Another election is over. The victors smile, rejoice in their success and develop their plans for the next three years. The vanquished seem bloody, battered and confused. They will need to lick their wounds, regroup for three more years and then try again to woo the voters.

What happened in the election provides many insights into what happens in employment relationships and employment law every day.

Chemistry, trust, and policy shape how people tick their voting paper in my view. And in that order, I think.

John Key, it would appear, has retained people's trust. He was subjected to many attacks and there may still be lingering questions about a number of issues that emerged during the campaign. But in his words, those that supported him "kept the faith".

There was, it seems, a lack of chemistry, or trust, in Labour leader David Cunliffe.

Perhaps the Labour caucus feels similarly, with Cunliffe apparently unable to command the respect, loyalty and trust of his MPs.

At the heart of every employment relationship is trust and confidence. It goes both ways. Employees should be able to trust their employer. Conversely an employer needs to trust their staff. The staff use and protect the employer's property, they protect the employer's brand, and they enhance the employer's client relationships. Employees can of course do the exact opposite, and when they do so the key test for terminating employment is met, namely that trust and confidence have been seriously damaged or destroyed.

An interesting and very recent Australian case in the High Court of Australia looked at the question of whether trust and confidence was an implied term in the employment relationship in Australia.

The case concerned Stephen Barker, an executive at the Commonwealth Bank of Australia whose position was disestablished following a restructure. He was told by the bank that if a suitable position could not be found his employment would end.

The bank did not redeploy Barker, and as a result he lost his job.

Barker challenged the bank's actions, claiming that it had breached mutual trust and confidence by failing to take positive steps to redeploy him. He was initially successful. However, the matter was appealed all the way to Australia's top court.

Surprisingly the High Court decided that there was no implied term of mutual trust and confidence in Australian employment agreements. Barker was therefore unsuccessful.

New Zealand courts have taken the completely opposite position. In a 1985 case between the Auckland Shop Employees Union and Woolworths, the Court of Appeal held that there was an implied contractual term of mutual trust and confidence in all employment relationships. That hasn't changed in the years since, and mutual trust and confidence is relied upon routinely by the Employment Relations Authority and the courts in their decisions.

As a result of the High Court of Australia's decision, there is now a significant disconnect between the New Zealand and Australian employment jurisdictions on trust and confidence. Were Barker employed in New Zealand, he would at least have had the leverage of the implied term of trust and confidence to rely upon.

Despite the new Australian approach, I believe that our position makes sense. You only want to employ staff that you can trust. Staff only want to work for an employer they can trust. And so too with politics, some would say.

Cullen - The Employment Law Firm is one of only eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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