Implied terms in an employment contract

You may be surprised to learn that the neatly drafted terms that make up a contract of employment are not the only terms that regulate the employer-employee relationship. Terms can be implied into an employment agreement as a matter of law, fact or industry custom/practice.

Implied terms (as they are known) may provide employers with more rights or they may place upon them the same additional obligations, which, unless discharged, may give rise to legal liabilities. Under the law, ignorance is no excuse and thus it is important that all employers familiarise themselves with a scope of sources that may give rise to implied contractual terms.

Terms implied as a matter of law

The law may imply terms into an employment contract as a matter of reason, justice and public policy. Such terms are thought to be necessary in preserving the delicate power balance between employers and their worker counterparts.

The most notable terms that the law will imply into an employment agreement are those concerning duties. The duties make up a range of responsibilities and obligations that both employers and employees must adhere to or discharge during the course of their working relationships. Some of the more notable examples include:

• the employer’s duty to provide a safe system of work;
• the employer’s duty to avoid foreseeable risks of hardship or injury;
• the employer’s duty of supervision;
• the employee’s duty to obey orders;
• the employee’s duty to use skill and care in the performance of their functions; and
• the employer’s duty to adopt changes in work methods.

Please note that the law will never imply terms into the employment relationship as a matter of convenience or reasonableness. Terms will only ever be implied where they are absolutely necessary.

Terms implied as a matter of fact

Certain terms are reasonably necessary to give business efficacy to the employment relationship. In such circumstances, they may be implied into an employment agreement as a matter of fact. Implications of fact cannot derogate from the express terms of a contract and will only arise if they:

• are reasonable and necessary;
• are so obvious that they go without saying;
• are capable of clear expression; and
• are compatible with the existing written terms of the agreement.

Terms implied as a matter of industry custom or practice

Some work customs are so well engrained into an industry or practice that they go without saying. Accordingly, terms may be implied as a matter of tradition. For a custom to become an implied term, it must be so notorious that no reasonable person can be said to be ignorant of it. As with terms implied by the law, however, a custom will never be imported into an employment agreement if it is contrary to the express provisions of the same.

Conclusion

Would you like to know more about implied terms or how they may affect your business practices? Our team of experienced LegalVision employment lawyers would be happy to assist you with any contract drafting and review queries that you may have. Contact us today to see how we can help.