The People Bulletin

Contracts of employment are always evolving, for example, as the employee is promoted. It is therefore extremely unlikely ever to find a written contract which records all the terms existing between an employee and employer.

Summary of contractual terms

Contractual terms may be:

• Express. These terms are usually contained in a letter or a contract or may be agreed orally. Oral terms are just as binding as written ones. For example, the EAT has held that an employer’s oral promise that the employee would not have to travel outside the south of England was binding, despite the fact that he had later signed a contract which contained a nationwide mobility clause;
• Implied (see below).
• Incorporated into an individual's contract of employment from some
  other source such as a trade union collective agreement or a disciplinary code.
• Statutory. Some statutory regulations governing such things as an employee's right to a minimum wage, minimum notice period and equal pay take effect as implied contract terms.

A written contract may contain most express terms, however, it may not include incorporated and statutory terms and will not any include implied terms.

Implied terms

Implied terms are not found in any letters or contractual documentation and often have not been discussed between the parties. However, one party may claim that a term has become implied into his/her contract, for example the right to receive enhanced redundancy pay where the employer has been paying enhanced pay for many years.

Some implied terms apply to all employment contracts. These include:

• The relationship of trust and confidence. So if, for example, an employer would like to get rid of an employee but does not want to sack them, they may decide to make the employee's life intolerable at work in the hope that they will resign and leave. Such conduct by the employer would constitute a breach of the implied term of trust and confidence and may, if sufficiently serious, entitle the employee to resign and then claim that they have been constructively dismissed.
• The duty of the employer to take reasonable care to ensure the health and safety of employees (which is also a statutory obligation)¹.
• The duty of an employer to provide and monitor, so far as is reasonably practicable, a suitable working environment which is suitable for the performance of the employee’s contractual duties. For example, an employer was found to be in breach of this duty where a secretary was refused a smoke-free area in which to work.
• The employee’s duty to obey the employer’s lawful and reasonable instructions.
• The employee’s duty of fidelity which requires the employee to act in the employer’s best interests, to maintain employer confidentiality and not to compete against the employer’s business whilst in employment.

Written particulars

Under the Employment Rights Act 1996² employees must be given a written statement of the terms of employment no later than two months after starting work. If an employee disputes the accuracy of a statement or if an employer does not give the employee a statement either party may refer the matter to an employment tribunal, which would determine what matters should have been contained in the statement.

There is no stand-alone right to claim compensation for an employer’s failure to provide a written statement. Such a claim can only be brought where other proceedings are issued. If a tribunal finds that there is no statement or if it is incomplete or inaccurate, then the employer can be required to pay two or four weeks’ pay as compensation, in addition to any compensation under the main proceedings. A week’s pay is subject to a cap on the amount of a week’s pay (currently £380)^3.

The written statement should specify:

a)  the parties to the contract;

b)  the date when employment began and when continuous employment started;

c)   the scale, rate or method of calculating remuneration;

d)  the intervals at which remuneration is paid (for example, weekly);

e)  any terms and conditions relating to hours of work;

f)   terms and conditions relating to holiday entitlement, sick leave and pension arrangements;

g)  notice rights;

h)  job title or a brief description of the work;

i)    if not permanent, the period for which employment is expected to continue or the date when it will end;

j)   place of work or, where the employee is required or permitted to work at various places, an indication of that and of the employer’s address;

k)  any collective agreements which directly affect the terms and conditions of employment;

l)    certain additional information where the employee is required to work outside the UK for a period of more than one month;

m) any procedure applicable to the taking of disciplinary/dismissal decisions relating to the employee;.

n) the person to whom the employee can apply for the purpose of seeking redress of any grievance; and

o)  whether there is a contracting-out certificate for the purposes of the Pension Schemes Act 1993.

Items a), b), c), d), e), h), j), and details as to holiday entitlement must be provided in one document – ‘The Principal Statement’. Subject to this, the particulars can be supplied in a series of self contained documents. If a contract of employment is in writing and it contains all of the matters that need to be referred to then no separate written statement of terms needs to be given to the employee. 

If any changes are made to an employee's terms of employment the employer must, within one month of the change, inform the employee by written statement.

Additional clauses

Finally, there are a number of additional clauses which employers are well advised to consider including in contracts of employment. Express flexibility clauses, for example, can give the employer the right to change the employee’s job duties or hours of work. Mobility clauses can allow employers to change employees’ place of work. It is clear that an express flexibility clause, drafted with sufficient clarity, will enable an employer to transfer an employee to other work without acting in breach of contract.

In addition, for senior employees in particular, an employer should consider including in a contract of employment restraints to take effect after termination of employment. Senior employees may have knowledge of technology, strategic information about the employer's business or customer contacts that they may try to use for the benefit of a new employer or business. Express restrictions can be specifically drafted to reflect the circumstances.

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[1] See also Peter Ross’  ‘When did you last review your safety policy’ in this issue of  The People Bulletin

[2] http://www.opsi.gov.uk/acts/acts1996/ukpga_19960018_en_1

[3] http://www.berr.gov.uk/whatwedo/employment/employment-legislation/employment-guidance/page33157.html