When you hire someone, obviously you will express the major terms of their employment to them either orally or in writing. Of course, it’s preferable to detail their terms of employment in an employment contract in order to minimise future disputes; although oral terms may be just as binding as written ones, they are very much more difficult to prove.

But as well as these expressed terms, employment contracts also have what is known as ‘implied terms’ giving the employee contractual rights.

Why are implied terms not stated in the employment contract?

  • They are too obvious to be recorded
  • They are common practice within the particular business or industry and are precise, reasonable and well known
  • They are necessary to make the employment contract work
  • The parties to the employment contract have shown by their behaviour their acceptance of such terms of employment

What are common implied terms?

Your duties as an employer:

  • To pay wages
  • To co-operate with the employee and maintain mutual trust and confidence
  • To take reasonable care for the health and safety of the employee
  • To take reasonable steps to bring to the employee’s attention any contractual rights which are dependent on them taking action, but which the employee may be reasonably unaware of
  • To exercise pension rights in good faith
  • To deal reasonably and promptly with employees’ grievances
  • To give a reasonable period of notice of termination when no specific period of notice has been agreed

Employee’s duties:

  • To work for the employer with due diligence and care
  • To co-operate with the employer, including obeying lawful orders, and maintaining trust and confidence and not impeding the employer’s business
  • To follow a duty of fidelity, i.e. not compete with the employer and not disclose confidential information, unless in the public interest
  • To take reasonable care for their own safety and that of fellow employees
  • To give a reasonable period of notice of termination when no specific period of notice has been agreed

In addition to these implied terms, contract terms may be implied into an employment contract by legislation, for example, equality clauses which are implied by the Equal Pay Act 1970; these terms of employment automatically apply to any employment contract.

Contract terms may also be incorporated into an employment contract from other sources. Prime examples are terms of employment which may be implied into an individual contract through collective agreements and work rules or staff handbooks.

Are there any contract terms that are unenforceable?

  1. Unlawful terms of employment or terms contrary to public policy. For example, an employment contract which has the effect of being a fraud on HM Revenue & Customs or an employment contract under which a foreign employee works illegally without a work permit.
  2. Contract terms purporting to waive an employee’s statutory rights.
  3. Discriminatory terms of employment. For example, on the grounds of sex, race or disability.
  4. Contract terms in restraint of trade if the main purpose is to restrain competition. Such terms of employment are enforceable, however, if their main purpose is to protect something in which you, as the employer, have a legitimate business interest worthy of protection. For any such contract clause to be enforceable it needs to be carefully drafted, taking into account the nature of the employee’s work. If the contract clause is too wide, it will be void.
  5. Terms of employment which purport to exclude or restrict liability for death or personal injury resulting from negligence. In the case of loss or damage other than death or personal injury, a contract term may only exclude or restrict liability for negligence if it satisfies the requirement of reasonableness (Unfair Contract Terms Act 1977)

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