The Unwritten Employment Contract

THE UNWRITTEN EMPLOYMENT CONTRACT This article follows on from the article in HR Solutions Newsletter, September 2003 on implied terms in redundancy the issue of implied and expressed terms in contracts of employment continues to be a hot issue.

Recent Employment Tribunal decisions have made it clear that when someone is employed a Contract of Employment exists—whether it is in writing or not. ‘Common Practice’, ‘normal behaviour’ and ‘obvious events’ form part of an unwritten but binding verbal or written Contract of Employment.

There are four types of terms in an Employment Contract:

Expressed terms are arrangements agreed between the parties either verbally or in writing Implied terms are arrangements that have not been spelt out but are regarded as being in place because they are:

 too obvious to be worth putting on record  common practice in the industry concerned  presumed to exist because of the way the parties have conducted themselves Incorporated terms are drawn from collective agreements, union agreements, workplace rules or terms that apply to other employees doing similar work Statutory terms are the requirements of employment law, whether the parties are aware of them or not.

It is also assumed that an implied degree of confidence and trust must exit between employer and employee. Breaching of this implied term would incline Courts and Tribunals to favour whoever has been disadvantaged as a result.

This subject also puts a psychological slant on the contract as employees now also have an expectation and a perception of their working environment and the factors of their employment whether or not they are expressed. For example, the expectation of training and career development.

Any breakdown in this ‘psychological contract’ will lead to demotivated and resentful employees.

Therefore, it is essential that this is managed effectively to reduce risks and maintain business efficiency.

From: HR Solutions Newsletter: September 2003 For further details see the article Company Values and Are You a 21st Century Employer?.



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