John Golden

Gainfully employed? Then you’ve agreed to more than you might think

So, you’re employed. Great job. However, hidden in the subtext of your contract is a whole raft of rights you might have inadvertently signed away.



When you commence a job in Australia as an employee you promise to perform as a good and faithful employee. You don’t have to sign any contract to this effect, it’s simply implied in the contract of employment. And the implications of what’s implied in an employment contract may be a surprise to some employees.

Employment contracts have both explicit and implied terms. One of the implied terms is the so-called “fidelity principle”: that employees have a duty of loyalty to their employers. There have been various challenges in the courts to this principle over the years, but the implied duty to be a loyal employee persists.

There are, in fact, plenty of implied duties and obligations that are part of being employed, including: the employee’s duty of care and competence; and the employee’s duty to obey the lawful reasonable instructions of the employer.

The one that can be a bit of a mystery is the employee’s duty of loyalty or fidelity. Here’s an example of this duty of loyalty in context. Consider confidential information acquired by an employee in the course of work: the duty of fidelity requires that an employee must not use information obtained from a work situation to the detriment of the employer.


There may be specific terms employers and employees know because they’re written down in the contract. But…the general point is that all contracts have an implied term that requires employees to act in a “loyal and faithful manner”.


Some left-field outcomes may eventuate from this duty. For example, the legal team at the Fair Work Commission has pointed to the case of a hotel chef who sued his former employer in the Federal Court for unpaid accrued annual leave. Things were turned on their head when he was ordered to pay almost $73,000 in “equitable compensation” for damages caused to his employer by his breach of express and implied terms of his employment contract.

The court found that the employee had failed to disclose that he had a business on the side and that this business sold chicken schnitzels at a price above cost price to his employer. The court noted that “an employee must perform his employment tasks for the benefit, and only for the benefit, of the employer”. Amponsem v Laundy (Exhibition) Pty Ltd (2014) FCCA 2206.


Bad-mouthing the boss

The fidelity duty also gets mixed up with the boundary lines for free speech. It’s turned out that saying nasty things about your boss on social media is a much bigger deal than having a go at the boss when you’re having a beer with a few mates.

There’s corporate reputational damage potentially at issue when you’re posting nasty comments about work on Facebook and other social media, and this pretty much tags you as an employee who is not loyal.

In one case a former Commonwealth public servant was critical of government policies. She unsuccessfully argued her employment conditions – including that she behaved “honestly and with integrity” – were subject to the implied constitutional freedom of political communication. The Federal Circuit Court found such an unfettered right does not exist. Even if such a right did exist, it did not provide a license to breach an employment contract.

In another case, the Fair Work Commission said it would be foolish of employees to think they may say whatever they wish on their social media accounts with total immunity from any consequences.

The situation becomes even more difficult for employees if employers have a workplace social media policy limiting or restricting such behaviour.



Whistleblowing can be viewed as problematic in the context of employee loyalty precisely because it breaches shared understandings of loyalty and confidentiality within an employment relationship.

The equitable action for breach of confidence may be used to restrict the disclosure of information in certain circumstances. The principle is that the court will restrain the publication of confidential information that has been improperly obtained or information that’s been given in confidence and that shouldn’t be divulged.

Certain laws (Federal, State and Territory) have been passed to protect public sector whistleblowers. However, there is virtually no current legislative protection for whistleblowers in the private sector. It’s noteworthy that a draft federal bill to protect private sector whistleblowers was in parliament in early December 2017 and its fate will be determined sometime in 2018. The present state of the draft legislation doesn’t help whistleblowers much as there must be “an imminent risk of serious harm or danger to public health and safety or the financial system” before any protection is triggered.


Use of confidential information

This duty of fidelity has commonly found its way into court in cases involving the unauthorised use of confidential information (including client lists) by employees or ex-employees.

It’s also noteworthy that an action for breach of confidence may be brought in order to restrain disclosure by a third party (like a new boss) who has received confidential information.


The bigger context

It’s important to recognise that there may be specific contractual terms that both employers and employees know because they’re written down in the contract, covering such matters as not competing with the employer for a certain time after leaving the job. And there’s legislation too requiring fairness and good practice from both employers and employees, covering such matters as unfair dismissal, discrimination and workplace safety and health.

But apart from specific contractual terms and specific legislation, the general point is that all contracts of employment have an implied term that requires employees to act with fidelity, that is, in a “loyal and faithful manner”. As you can see this implied term can have significant implications for both employees and employers.


Note: This article is intended as a guide only and does not constitute legal advice.


John Golden

John Golden is a writer specialising in industrial relations and employment law, something he’s done for over 35 years. Now he’s a cynical man of mature years with plenty of axes to grind

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