Subasic v Hewlett-Packard Australia Pty Ltd

The case of Subasic v Hewlett-Packard Australia Pty Ltd was heard in the Federal Circuit Court, involving the plaintiff, Mr Subasic, who brought an action against his employer, Hewlett-Packard Australia Pty Ltd, for failure to pay incentive payments as agreed in his contract of employment. The dispute centred on whether the employer had the discretion to cap the incentive payments and whether the contract implied terms of good faith and duty to cooperate that were breached.

The court was required to determine the extent of the employer's discretion to cap incentive payments and if such action was permissible under the terms of the contract. Additionally, the court had to assess whether the contract contained implied terms of good faith and duty to cooperate, and if these terms were breached by the employer's decision to cap the incentive payments. The crux of the matter lay in interpreting the contractual language and whether the employer's actions were consistent with the spirit and intent of the employment agreement.

In delivering the judgment, the court found that the contract did not explicitly permit the employer to cap incentive payments. The court held that the employer's decision to cap the incentive payments constituted a breach of the contract. Furthermore, the court found that an implied term of good faith and duty to cooperate existed in the employment relationship, and the employer's actions were in breach of this implied term. Consequently, the court ruled in favour of the plaintiff, Mr Subasic.

The court ordered that the employer, Hewlett-Packard Australia Pty Ltd, pay Mr Subasic the unpaid incentive payments, along with interest and costs. The judgment underscored the importance of clear contractual terms and the implied duties that underpin employment relationships.