Last reviewed 22 February 2019

In this article, Kathy Daniels explains the concept of the implied term of the contract of employment.

Express terms

If you asked most people about their contract of employment, their thoughts will turn to the piece of paper that was issued by their employer setting out their terms and conditions of employment. All employees should be issued with such a written statement within two months of starting employment (there will be a requirement to issue the statement from day one of employment from 6 April 2020).

However, this is not the full contract of employment. This document summarises the main express terms of the contract — the terms that have been discussed and agreed between the employer and the employee. There are also implied terms of the contract of employment.

Implied terms

Implied terms could be terms that are so obvious that they do not need to be discussed. For example, it could be said that the employee should not steal from the employer itself is an implied term. This is obvious.

Some terms will be implied by statute (ie Acts and regulations). For example, the Working Time Regulations 1998 set out the rights to rest breaks and put a restriction of 48 hours on the working week. The express terms in the employment contract cannot breach those regulations, but the detail of them does not have to be written out in the contract for them to apply.

Implied terms can also occur through custom and practice.

Custom and practice

Custom and practice is probably the aspect of implied terms that causes most difficulties to employers. If something has always happened in a certain way, then the employee could have a contractual right for it to continue.

For example, if you always allow employees to leave 30 minutes early on a Friday, even though their contract says that they should work longer, the employees could have a contractual right to leave at that time. If you wanted to return to the originally agreed hours at some point you would not be able to insist that employees complied with your request.

Another common example is the Christmas bonus. If you have always paid the same bonus each Christmas, you might then have an obligation to continue to pay that bonus because it has become a contractual obligation through custom and practice.

How often does something have to happen before it becomes an implied term? Unfortunately, the law does not specify a number of occasions, but it should be something that is happening regularly.

Common implied terms

There are also a number of implied terms that are always seen as being part of the contract of employment. The common ones to note are the following.

Mutual trust and confidence

It is implied into all contracts of employment that the employer and employee will treat each other with mutual trust and confidence. This means, for example, that the employer will not bully or harass an employee.

In the case of Morrow v Safeway Stores [2002], the employee was criticised in front of her colleagues and at least one customer. She resigned in response to this, claiming constructive dismissal. She argued that the implied term of mutual trust and confidence had been breached, and was successful in her claim. Of course, a manager should be able to reprimand an employee for poor performance, but this should not be done in a way that humiliates the employee.

Duty of care

The employer has a duty to take care of the employee. This could, for example, extend to providing a safe place and a safe process of work.

In Walker v Northumberland County Council [1995], the employee suffered a breakdown. While he was recovering, he discussed his situation with the employer and support was put in place for when he returned to work. When he did return, this support was soon removed and he suffered a further breakdown. He was able to argue that the employer had breached its duty of care to him — it had not provided him with a safe place of work.

Duty of fidelity

This is the duty of faithfulness and is the expectation that neither the employer nor the employee will deliberately do anything to damage each other.

In Sanders v Parry [1967], the employee was planning to set up his own business, taking away a substantial customer base from his employer who he was still working for. That was a breach of the duty of fidelity.

Implications of a breach

If the employer breaches the contract of employment, the employee could resign in response to that breach and bring a claim of constructive dismissal. To bring a claim of constructive dismissal, the employee must have at least two years’ service and must have resigned in a timely manner. It is not constructive dismissal if the employee continues working for several months, maybe while looking for alternative employment, and then resigns.

If the employee breaches the contract of employment, then they could potentially be dismissed. The severity of what has happened would be taken into consideration, but in the case of serious breaches, summary dismissal (dismissal without notice) following a fair procedure could be appropriate.

Key points

  • Think about anything that you “always do”. Has it become an implied term of the contract through custom and practice? Would it be a good idea to formalise this?

  • Ensure that your line managers are aware of the implied duty of mutual trust and confidence. Act promptly if anything happens which might breach this duty.

  • If an employee breaches their contract of employment, be prepared to take action to show that you will not tolerate this sort of behaviour.