YOUR EMPLOYMENT CONTRACT MIGHT BE MORE THAN YOU BARGAINED FOR

Employers and employees need to be aware that an employment contract can include “implied” terms which are not expressly written or spoken about between the parties.  Two recent cases have addressed implied terms regarding suspension and “gardening” leave.

In Avenia v Railway & Transport Health Fund [2017] FCA 859 the Federal Court of Australia held that an employer has a right at common law to suspend an employee on full pay for as long as it is necessary to undertake and conclude an “investigation”. This includes where an employer is investigating alleged employee misconduct or trying to determine facts relevant to such allegations.

“Gardening” leave is the practice where an employee has either resigned or been terminated and the employer requires the employee to stay away from the workplace during his or her paid notice period.  In Grace Worldwide (Australia) Pty Limited v Steve Alves [2017] NSWSC 1296 a senior employee announced his resignation to join a competitor and the employer placed him on three months of gardening leave.  The NSW Supreme Court found that the employer had an implied right to require the employee to take gardening leave because implying that term to the employment contract was “reasonable and equitable and necessary to give business efficacy to an employment contract so as to avoid contact between an employee and a competitor”. 

It is crucial for both employers and employees to understand the rights and obligations in their employment contracts, whether they are express or implied by law. 

Please contact our office if you require any help in reviewing your employment contracts, either as an employer or an employee, or to discuss your rights and obligations.

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