Employment contracts are legally binding agreements between an employer and an employee. These contracts outline the terms of employment, including the job description, salary, working hours, benefits, and conditions of termination. However, not all terms in an employment contract are explicitly stated. Some terms are implied by law or custom and are equally binding on both parties. In this article, we will explore what implied terms are and how they affect the employment relationship.
Implied Terms Explained
Definition and Types of Implied Terms:
Implied terms are contractual terms that are not expressly stated but are presumed to be included in the agreement. These terms can be categorized into two types:
- Terms Implied by Law
These are terms that are automatically incorporated into every employment contract by virtue of legislation or case law. They are designed to protect the rights and interests of employees and ensure fair treatment in the workplace. Examples of terms implied by law include the duty of care, the duty to pay wages, the duty to provide a safe working environment, and the right to take industrial action.
- Terms Implied by Custom and Practice
These are terms that are implied into employment contracts based on established practices or customs in a particular industry or workplace. They may not be expressly stated in the contract but are considered part of the parties’ understanding of their obligations. For instance, it is customary for employers to provide paid vacation time, sick leave, and public holidays to their staff.
How Implied Terms are Established:
Implied terms can be established in several ways, including:
- Statutory Provisions
Some implied terms are incorporated into employment contracts by statute. For example, the Employment Rights Act 1996 sets out the minimum notice period an employee must give when terminating their employment.
- Collective Bargaining Agreements
In unionized workplaces, collective bargaining agreements may contain implied terms that are binding on both the employer and employees. These terms may relate to wages, working conditions, benefits, and job security.
- Custom and Practice
Customs and practices in a particular industry or workplace can also give rise to implied terms. For instance, in the construction industry, it is customary for employers to provide protective gear and equipment to their workers.
Examples of Implied Terms in Employment Contracts
Duty of Care:
The duty of care is an implied term that requires employers to take reasonable steps to ensure the safety and well-being of their employees while at work. This duty extends to providing a safe working environment, adequate training, and supervision, and taking measures to prevent accidents and injuries. Employers who breach this duty may be held liable for negligence and face legal action.
Right to Redundancy Pay:
The right to redundancy pay is an implied term in employment contracts that arises when an employee is made redundant due to business closure or downsizing. The amount of payment depends on the length of service and salary of the employee and is calculated based on a statutory formula.
Duty to Provide Reasonable Notice of Termination:
The duty to provide reasonable notice of termination is an implied term in employment contracts that requires employers to give employees adequate notice before terminating their employment. The length of notice depends on the length of service and seniority of the employee and is typically one week for every year of service, up to a maximum of 12 weeks.
Implications of Implied Terms
Legal Obligations:
Both employers and employees have legal obligations under the implied terms of an employment contract. Breaching these terms can result in legal action, including claims for unfair dismissal, breach of contract, and discrimination.
Cost Implications:
Employers who fail to comply with the implied terms of an employment contract may face significant financial costs, including compensation payments, legal fees, and damage to their reputation.
Employee Expectations:
Implied terms can also affect employee expectations of their rights and entitlements in the workplace. Employers who fail to meet these expectations risk damaging morale, productivity, and retention rates.
Conclusion
In conclusion, employment contracts contain both express and implied terms that govern the employment relationship. Implied terms are binding on both parties and can arise from legislation, custom, and practice. Employers must be aware of these terms and ensure compliance to avoid legal action, financial costs, and damage to their reputation. Employees, on the other hand, should be aware of their rights and entitlements under these terms to protect themselves against unfair treatment in the workplace.