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What terms are used in a Contract of Employment?
The foundation of the employment relationship is the Contract of Employment. This sets out the rights and obligations of both the employer and the employee.
Here is an overview of the different types of terms that can be found in your employees’ contracts.
Statutory Terms
Statutory terms are those terms that are imposed by the law.
For instance, you cannot agree with an employee that you will pay them below the applicable national minimum wage rate or give them a shorter notice period than the statutory minimum.
Express terms in a Contract of Employment
Express terms are those that have been specifically mentioned or have been agreed by the parties. This includes how much the employee will be paid, how many hours they will work and how much holiday they are entitled to.
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Implied terms
In the absence of express terms, there may be implied terms. This means that even though they are not written down or mentioned in the contract, they still need to be followed.
Examples include:
- Employers must provide a safe working environment for all their employees;
- Employers and employees have an implied duty to maintain a relationship of mutual trust and confidence;
- Employees have a duty to not breach their duty of fidelity; and
- Employees must follow reasonable and lawful orders.
They may seem very obvious to you, but all the duties explained above are necessary to make the contract work.
It may also be an implied term if there is a long-standing or established custom or practice across the workplace or industry.
An example of an implied term in a Contract of Employment is that employees will be paid overtime for any additional hours or they will receive a bonus at Christmas. Although the contract does not state these entitlements and the employer has never sat down with the employee to specifically agree to it, it can form part of the contract.
An implied term will be the practice if:
- Clear and certain
- Fair and resonable
- Has been going on for a long period of time
- Known to employees with a reasonable experience of receiving it
- Consistently applied to employees
Incorporated terms
The terms that are included on other documents, such as the Employee Handbook, may be incorporated into the Contract of Employment.
Remember…
Although contracts can be in writing or agreed orally, a clear and well-drafted written contract gives both parties to the agreement certainty. It makes clear what terms have been agreed in case a dispute arises in the future.
The terms in the contract are binding on both parties. This means that if either you or employee violates a term, the other party could face a claim for breach of contract.
Our Employment Law Advisers can draft your Contracts of Employment to ensure that you meet legal requirements, best practice and your business interests. They can also give you advice if you think your employee has breached a term of their Contract of Employment.
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