Implied Terms of Contract

Express contractual terms of employment will be set out in the written contract of employment and (PAYG link). Sometimes various staff policies and procedures may be expressly incorporated into the written contract of employment. However, quite often many terms of the contract will not be explicitly set out in the written contract, and instead will be “implied” into the contract.

As a general rule a term will be implied into the contract if it was obviously agreed by both parties (even though not confirmed in writing) or it was necessary in order to give the contract efficacy (basically essential for it to make the contract work).

Some terms may be implied where they are common to the particular business, or are usual in the business of the particular employer in question. To fit into this category a particular implied term applicable to the industry or trade must be well known and reasonably certain. For a term to be implied by custom in a particular business it must be followed with a frequency which indicates that both parties regard it as a legal obligation rather than simply a normal policy or process.

If there is a particular custom or practice in the trade or industry that an employer does not want to apply in his/her business the employer must explicitly address the issue in the written contract. The general approach adopted by the courts and employment tribunals is that express terms prevail where there is an apparent conflict with an “implied term”. Therefore if an employer wants to be sure of enforcing particular requirements in their business they should include them as express terms in the written contract of employment (PAYG).

There are various implied terms that impose duties on employers, and some that impose duties on employees:-

1. Employer’s Implied Duties include:-
   
   a) Duty to take care of the employee’s health and safety at work
   
   b) The duty to provide, so far as is reasonably possible, a working environment that is suitable for the employee to fulfil their duties.
   
   c) A duty to provide promptly and reasonably an opportunity for an employee to obtain redress if any grievance they may have.
   
   d) A duty to exercise a contractual discretion rationally and lawfully. (N.B This is particularly important in connection with bonus payments); and perhaps the most argued over,
   
   e) A duty that the employer shall not, without reasonable and  proper cause, act or conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence which should exist between employer and employee. N.B Breaches of the latter implied terms are often citied in constructive dismissal cases, as it is capable of applying to a very wide range of situations.
2. Employee’s Implied Duties Include:-
   
   a) To work for the employer faithfully and not act against the interests of the employer’s business. However, mere preparation to set up in competition after leaving the current employer’s business is not regarded as a breach of this implied term.
   
   b) To carry out the reasonable and lawful instructions of the employer,
   
   c) To work with due diligence and care, and
   
   d) Not use or disclose the employer’s trade secrets and confidential information.

It is clear that the implied terms cover a wide range of issues relevant to the day-to-day running of the employer’s business. If the employer wants to give any of them greater force or precedence it will need to address them explicitly in the written contract of employment (link PAYG).