University of New South Wales - Human Resources - Information Paper - Implied Duties and Obligations of Employer & Employee

INFORMATION PAPER

Approving Authority:	Director, Human Resources
Date of Approval:	June 2003
Last Amended:
Contact Officer:	Industrial Relations Advisory Unit

Introduction

To make a contract of employment workable, the law has seen fit to imply certain basic rights and obligations upon both employers and employees. They can, however, be overridden by express terms in the contract to the contrary.

Some of the more common duties which the Courts will readily imply into most contracts of employment follow.

Employer's Duties	Employee's Duties
Duty to pay remuneration	Duty to work in a skillful and competent manner
This duty generally exists even if there is no work to be done, especially in relation to fixed term contracts This duty is affected by legislation or award provisions which effectively allow an employer to lawfully stand down employees in certain circumstances	An employee must exercise reasonable care and skill in the performance of her/his work. If the employee is negligent he/she may be liable to indemnify the employer (or contribute) for losses sustained by the employer· This duty only applies to work for which the employee has been hired to do and which he/she has claimed he/she is competent to do. For example, an electrician who breaks valuable artwork which he was told to move, is not liable because he only warrants to be a skillful and competent electrician and not a furniture mover! This duty can be superseded by insurance, especially in the case of accidents. It is uncommon, but not impossible, for an employer to sue an employee for breach of this duty as most work risks have been covered by insurance.
Duty to provide work	Duty to obey lawful and reasonable commands
There is generally no duty to provide work (if pay is still continuing), but this is dependent on the type of employment contract: Type of Contract Casual contracts - due to nature of casual relationship, there is no duty to provide work Contracts where pay is linked to performance (eg. piece work, bonus, time-rate contracts)- since the employee’s pay is dependent on her/his productivity, the employer generally will be obliged to provide sufficient work to enable the employee to earn a reasonable living Contracts where an employee needs to acquire skills (eg apprenticeship or training contracts) or maintain skills (eg surgeons) - the employer generally will be obliged to provide a reasonable level of work Contracts involving the enhancement of reputation - such as where public notoriety and reputation are essential for career potential (eg. professional actor, professional sportsperson) Contracts where the employee is appointed to a specified office - there is a good argument that the employer must provide duties to fit the specified office. Cases have involved a chief sub-editor of a newspaper and a Dean of a particular School. NB - this particular requirement has implications in the University in restructuring, where positions are abolished and new positions created	An employee has a duty to obey lawful and reasonable orders relating to the performance of duties relative to the scope of employment Wilful failure to obey such commands can render an employee liable to summary dismissal. However, this depends on the nature of the order/command and the degree of refusal.
Duty to act fairly and in good faith	Duty to provide faithful service /act in good faith
This is not a well established duty, but rather a more recent invention of the Courts in dealing with awkward situations involving elements of "unfairness". It may potentially be a powerful mechanism which employees can use to argue for damages due to say, distress, especially in cases of unfair dismissal.	This duty covers a broad scope and depends on the facts. Some of the most common are as follows: - an employee must not use her/his position to derive secret profits/benefits - an employee must account to employer for all moneys and property received in the course of employment - an employee must not solicit the employer’s customers whilst she/he is employed (eg. with a view to setting up a business in competition) - an employee must not divulge or abuse trade secrets of an employer (eg. engaging in work in spare time for a commercial rival) an employee has a duty to make available to the employer inventions made in the course of employment. This is so even if the employee has not been particularly employed for the purpose of the invention - an employee would normally be required to disclose information relevant to the employer’s business (such as the dishonesty of fellow employees) to the employer. This is so especially if the employee is in a management/supervisory role
Duty to provide a safe system of work
This duty is both a tort (eg. negligence in failing to provide a safe system of work) and an implied term in a contract of employment It is closely linked with other statutory duties contained in workers’ compensation and occupational health and safety legislation
Duty to comply with statutory obligations
eg. workers’ compensation; occupational health and safety; anti-discrimination ; privacy legislation etc.	An employee must comply with all relevant legislation, particularly in the area of occupational, health and safety and depending upon their role and responsibility, must be able to act with authority to prevent hazards or risks from occurring in circumstances where harm or injury is likely.
Duty to indemnify the employee (expenses)
The employer must indemnify the employee for expenses legitimately incurred by the employee in carrying out the work instructed.

Conclusion

It is important to be aware of some of these basic duties which are implied into most contracts of employment, regardless of whether the employee is covered by an award, an enterprise agreement or other form of written or oral contract of employment.

In some cases, and depending on individual facts, a breach of one of the above duties may entitle an employer to dismiss an employee with or without notice, and sue for damages or recover profits improperly obtained. Conversely, a breach of a duty imposed on an employer may entitle an employee to claim that her or his contract has been breached and seek damages for that breach in the appropriate tribunal or court.

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