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Implied Terms Notes

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This is an extract of our Implied Terms document, which we sell as part of our Labour Law Notes collection written by the top tier of University Of Otago students.

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Labour Law Lecture, 7th April 2011: Implied Terms: Terms Implied in Employment by the Common Law: Mutual Trust, Cooperation, Confidence and Fair Dealing:
- duty of fair dealing Applies to both employer and employee, and particular characteristics apply to each. This is a relatively new common law term. Received into NZ law in the 1970s, by 1985, cases got up to the CA. Woolworths: Ms Dragovitch. Dismissed for alleged stealing. Argued that employer breached its duty of fair dealing by dealing severely with her. Sent back to arbitration court to find on the facts whether it was a breach of this duty. Arbitration court fuond that employer had acted firmly but not harshly. Marlborough Harbour Board v Goulden: Judicial review case, not dismissal. Goulden had been general mangager of Marlborough Harbour Board, dismissed. No union. Was a public sector employee - if you were sacked from the public sector you could seek judicial review of that decision. Dismissal was struck down, harbour board appealed, CA held that the HC was right. He had been dismissed unfairly - fairness, natural justice etc a ground for judicial review. Dicta in this case that said he was entitled to fair treatment, and this coincided with the implied term in employment contract of fair treatment. Malik v Bank of Credit Commerce International Liquidation (1997) Important for two reasons:

1. First HL authority that recognises the existence of this duty in employment law

2. Shows a variety of contexts in which implied common law duties can arise.
- Dealt with a company being liquidated.
- Court deciding whether employees should be regarded as creditors, because their contracts had been breached - entitled to compensation?
Case that shows that a court is able to award damages for breach of this contractual obligation of fair treatment. Arose from the collapse of a bank (BCCI) in 1991, and the appellants in this case were two employees who lost their jobs. Claimed that their association with the bank placed them at a serious disadvantage in finding new employment. Sought damages. Liquidators had rejected this head of loss. Breach - implied term of fair dealing, mutual trust and confidence. Employer had an implied common law duty not to harm their employees employabilty in the future, and by operating as a corrupt enterprise, they are seriously harming the employees chances of getting a job. Determined on the basis of an agreed set of facts, and also whether there was a reasonable cause of action to receive 'stigma compensation'. Stigmatised by having worked for that particular employer because employer ran its business in a corrupt and dishonest manner. A viable cause of action?
Strike Out application - applicant suing defendant, and either there seems to be no legal basis for a lawsuit or the legal basis is totally misconceived. No cause of action. No chance of success. Employer would be breaching duty if they knew or ought to know that running business in such a way would harm their employees.

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