Contracts of employment

Overview

• A contract of employment will exist from the moment an unconditional job offer is made and accepted.
• It does not matter that the employee has no written contract; contracts can be oral or written and are often a mixture of both.
• The employee also need not have started work in order for there to be a contract of employment.
• A contract of employment is created in the same way as any other contract. There are 3 essential elements: an unconditional offer of employment; acceptance by the successful applicant; and consideration (the remuneration paid to the employee in exchange for their work). The parties must intend to enter into the contract and its terms must be sufficiently certain.
• In cases of disputed terms, or where a contract does not deal with a disputed matter, the relevant provision may be implied into the contract.

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How the contract is recorded

• An employment contract is usually in written form but it can be agreed verbally between the parties, or it can be a combination of both. The written statement of particulars however must be in writing.
• The statement of employment particulars is not an employment contract (as it is given to the employee after he or she has started work). However, it is often the best evidence of the contractual terms.
• It is not unusual for some terms to have been agreed orally even though not recorded in the written contract.  It is also common for variations to contracts of employment to be agreed orally and not recorded in writing (although this is not advisable).
• To safeguard against the risk of confusion, the contract of employment should include a clause stating that it represents the entire and only agreement between the parties, and a clause stating that no variation will be valid unless recorded in writing.
• The golden rule is that the successful job applicant should be left in no doubt as to the terms of the proposed new employment. He or she should be given the chance to consider them and to take any advice he or she considers appropriate

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Express terms

• These are terms which have been set down in writing or agreed orally.
• An express term will only be overridden if it seeks to take away a statutory right (e.g. if the term specifies the rate of pay at less than the National Minimum Wage).
• Where there are conflicting express terms, a court or tribunal can look at what the intentions of the parties were at the time they concluded the contract

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Implied terms

• Terms may be implied where it can be presumed that it was the intention of the parties (at the time that the contract was entered into) to include such a term in the agreement.  These may be:
  • obvious terms, i.e. the term is such an obvious one that the parties must have intended it
  • necessary terms, i.e. a court or tribunal may imply a term which is necessary for the contract to work properly
  • terms implied by custom and practice,  i.e. in the particular business it is normal custom and practice for a particular term to be incorporated into employment contracts (e.g. that an HGV driver will hold an HGV licence)
  • terms implied by conduct, i.e. an intention to include the term can be deduced from the way the parties have conducted themselves
• In addition to implied terms arising from individual employment circumstances, the law assumes that all parties to an employment contract intend the contract to contain certain terms which are central to the employer-employee relationship. Some of the most important implied terms are as follows:
  • employee's duties: fidelity; obedience; working with due diligence and care; and not using or disclosing the employer's trade secrets or confidential information
  • employer's duties: to take care of the employee's health and safety (quite apart from its obligations under health and safety and related law); to pay agreed remuneration provided the employee is ready and willing to work; and to deal with grievances
  • mutual duties: not to destroy or seriously damage the relationship of trust and confidence; and to give a reasonable period of notice of termination, if nothing specific has been agreed about how and when the employment relationship will end

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Incorporated terms

• Terms may be incorporated from some other source such as a union collective agreement or work rules.
• Incorporation may be express (e.g. the contract specifically states that certain terms will be regulated by a collective agreement) or implied (e.g. where there is a clear custom that terms of a collective agreement are incorporated into contracts).

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Other contract terms

• policy on expenses - see Benefits and expenses section of Policies and Documents for a specimen expenses policy, subscribers only
• bonus scheme arrangements - see Bonuses section of Policies and Documents for specimen bonus scheme clauses, subscribers only
• duty to report misconduct of others - see Business protection section of Policies and Documents for a specimen clause, subscribers only
• exclusivity of services - see Business protection section of Policies and Documents for a specimen clause, subscribers only
• confidentiality provisions applicable during and after employment - see Confidentiality section of Policies and Documents for various specimen clauses, subscribers only
• data protection - see Data protection section of Policies and Documents for a specimen clause, subscribers only
• company car policy - see Benefits and expenses section of Policies and Documents for a specimen company car policy, subscribers only
• employer’s right to make deductions from salary to recoup monies owed by the employee - see Deductions from pay section of Policies and Documents for a specimen clause, subscribers only
• disciplinary and grievances procedure - see Disciplinary issues section of Policies and Documents for model procedures, subscribers only
• anti-harassment - see Equal opportunities section of Policies and Documents for model clause and policy, subscribers only
• flexibility/change of duties - see Flexible working section of Policies and Documents for model clause and policy, subscribers only
• social media issues - see Internet, email and social media section of Policies and Documents for model clause and policies, subscribers only
• employer’s policy on problems getting to work in extreme weather or unforeseen circumstances - see Miscellaneous section of Policies and Documents for model policy, subscribers only
• probationary issues - see Probationary periods section of Policies and Documents for specimen clause, subscribers only
• relocation - see Relocation section of Policies and Documents for specimen relocation policy and clause, subscribers only
• restrictive covenants preventing the employee from working for competitors, soliciting clients and/or soliciting employees when the employment has come to an end
• working hours flexibility - see Working hours section of Policies and Documents for model clauses providing for varying degrees of flexibility, subscribers only
• garden leave provisions
• restrictions on the employee's freedom to have other jobs or business interests whilst employed - see Business protection section of Policies and Documents for model policy on staff working for other employers/moonlighting, subscribers only
• obligations to return company property on demand/on termination of employment - see Termination of employment section of Policies and Documents for model clause, subscribers only
• reimbursement of training costs - see Time off work section of Policies and Documents for model clause, subscribers only
• sickness issues - see Sickness and sick pay section of Policies and Documents for model clauses, procedures and letters, subscribers only

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Resources

• Getting it Right: Contracts of Employment

• The Employment Contract

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