Implied contractual terms

All contracts of employment contain implied terms. The need for this arises out of common - and more or less inevitable - failures of the parties to discuss and agree every aspect of a working relationship, about which a dispute may arise. This failure can be attributed to the fact that employment relationships are frequently open-ended and last over a considerable period which is not determined at their start.

Employers’ implied duties

The list of an employer’s implied duties may be very long. Some will be specific to a particular contract and others are common to all. Common implied terms include:-

• the duty to reimburse an employee for expenses incurred in the course of carrying out her/his duties.
• the limited duty to provide work.
• The duty to provide employees with information about terms and conditions of employment.
• the duty to allow time off for public service and trade union duties.
• the duty to protect the health and safety of employees and provide a safe work environment.
• the duty to co-operate with employees in the fulfilment of their duties.
• the duty not to damage trust and confidence without good reason.
• the duty to take reasonable care when providing references.

Employees’ implied duties

There are implied contractual obligations for employees too in any contract of employment, including obligations:-

• to obey lawful and reasonable instructions.
• to provide personal service - an employee must – in the absence of a special contractual provision – do her/his work for the employer personally.
• to exercise reasonable care and skill in carrying out duties.
• to take care of the employer’s property or interests - in Janata Bank v Ahmed [1981] IRLR 457, CA, a bank manager failed to use due care when vetting applications for overdrafts, causing the bank to suffer loss when debtors defaulted; he was successfully sued for breach of contract.
• to adapt to reasonable requirements to change methods or techniques of working.
• to protect an employer’s confidential or secret information.
• to treat the employment relationship as one in which an employee owes an employer a duty of fidelity.

How are terms implied into contracts?

The above rights and obligations are implied into all contracts of employment because the law recognises that they are necessary in order for the employment relationship to work. Other implied rights or obligations may arise in a particular working relationship, where two tests are met:-

• is it necessary to imply the term to make the contract workable?
• does the term reflect a long-standing, consistently applied, well-recognised custom and/or practice in the place of employment?

For example, if redundant employees have, consistently and over a reasonably long period of time, been given redundancy pay in excess of the statutory minimum, this may have established a ‘right’ to enhanced redundancy pay for redundant employees in the future.

“Custom and practice” is often misunderstood. It does not mean that if the parties have behaved in a certain way over a long period of time that one party has a right to insist that that behaviour continue because it has now become a contractual term. The starting point will always be the express terms that have been agreed.