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Implied terms in contracts of employment 

In addition to the express terms contained in contracts of employment, the courts and tribunals have over the years implied a number of additional terms into them.

In general there are only four reasons for implying terms into a contract of employment:-

1.”Business efficacy” – the basic rule is that a term will be implied into a contract of employment if it is necessary to give the contract “business efficacy”, or put more simply, to make sense in practice.

2.”Custom and practice” – terms may also be implied out of custom and practice. This occurs if, although unwritten and unspoken, a particular practice has operated in an organisation such that it has become well established. If the court or tribunal dealing with this is satisfied that a right or obligation has been established by “custom and practice”, this will then become contractual.

An example of this might be allowing employees to take an afternoon off without losing pay if their children become ill. It may be that the fact that this is allowed has not been written down anywhere, but everyone knows it happens and relies upon it to the extent that it has become a contractual right.

The express terms of a contract of employment can also sometimes be varied by custom and practice. An example of this may arise where your staff have written employment contracts which say that they are contractually obliged to work a 35 hour week. However, if in fact have only worked a 34.5 hour week for many years, you may find it difficult to enforce the 35 hour week again as your staff may be able to argue that their contracts have been varied by established custom and practice.

3. “Special employment relationship” – one of the main areas of development in employment law has been the readiness of courts and tribunals to find that the employment relationship is of a special nature and, as such, certain obligations fall upon you and your staff. This has led the courts and tribunals to imply certain terms into contracts of employment by virtue of that  “special relationship”.

Finally, the effect of many pieces of legislation is to imply terms into contracts of employment to ensure that employees can enjoy their statutory rights.

Examples of common implied terms in contracts of employment

The most wide-reaching implied term in an employment contract is that there should be mutual trust and confidence between you and your staff. Basically you must not behave in such a way as to damage your staff’s trust and confidence in them. This includes ensuring that the staff do not suffer from bullying and harassment in the workplace and respecting the privacy of your staff. In return, your staff owes you a duty of good faith whilst the employment relationship continues.

Some examples of behaviour which may be in breach of the implied term of trust and confidence include:

  • demoting an employee;
  • behaving inappropriately or using offensive language towards an employee
  • invasion of an employee’s privacy
  • bullying and harassment of an employee
  • failing to deal with an employee’s grievance in a reasonable manner
  • taking unwarranted disciplinary action against an employee

Some other common implied terms include:-

  • Safe system of working – the employer must ensure that the organisation of work is safe
  • Reasonable support – the employer must ensure that employees have adequate resources
  • Suitable working environment – the employer must ensure that all equipment is safe and in good working order
  • Confidentiality – the employee is required to keep the employer’s trade secrets confidential, even after employment has ended.

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