the The identity of the parties · The

the rights and duties of both
employees and employers are set in a contract of employment. They are referred
as ‘terms’ of contracts. Terms of employments can be found in express or
implied agreement, collective agreement and various statutory provisions. All
employees have an employment contract which can be verbal, written or a
combination of both.

An express term of a contract
has specific essentials such as an offer, acceptance of this offer,
consideration, mutual agreement, (mental) capacity and the legally acceptance
of the terms set out in a contract. The law states that certain express terms
must be given to an employee in the form of a ‘written statement of
particulars’ within two months of starting a new job. Once all the negotiations
have been completed, both parties expressly state the terms which form part of
a contract. This statement must contain particulars such as –

The identity of the parties

The start date and the date of their continuous


Commissions and bonuses

Working hours

Nature of duties



Sick pay and maternity/paternity pay

It is the courts and tribunal
duties to look into the meaning of such express terms in a way that is
consistent with the law. General contractual rule is that agreed terms of a
contract can only be amended by an agreement between both parties. If one of
the party does not agree with the change it can be held as breach of contract. For
example, in Cole v Midland Display Ltd 1
a manager who was an employee refused to do overtime without being paid, the
court held that his dismissal was fair. The court stated that as he was
employed as ‘staff’ meant that he was guaranteed to wages regardless if there
work or not and in return he was required to do reasonable overtime without pay
if it was required.

Occasionally courts and
tribunals are prepared to imply a term into the contract in cases where the
parties did not adequately reflect the intentions of the parties at the time of
the contract. In this situation, the court may be asked to imply terms into the
contract to fill the gaps in drafting. Courts are reluctant to imply terms in
to a contract set between two parties at common law. It is the parties’ role to
agree terms and conditions and it is believed that it’s not the role of the
courts or tribunals to rewrite their contract. There are some circumstances
where courts will imply a term into a contract at common law such as – Terms
implied through custom, terms implied in fact and terms implied at law2.

There may be certain terms
that are customary to a particular trade profession or locality. If the
contract falls within one of these categories and certain customary terms have
not been expressly stated then they may be implied. These generally derive from
common law and from specific statute law. An external observer looking at the
behaviour of the employees and the employer, must be able to conclude that both
parties must have intended their practice to be contractual right with legal
force. In Hutton V Warren, the plaintiff’s farm lease expired and he claimed
allowance for seed and labour but there was no provision in the lease. The
court had to establish if a contract was silent on a point, could a term be
implied? It was held that a term was implied, because of its local custom and
it also found that the contract didn’t expressly state that allowance wouldn’t
be given either3.

Terms applied in facts are based
on the alleged intentions of the two parties. The legal test for implied terms
are – the ‘business efficacy’ test and the ‘officious bystander’ test. In the
business efficacy tests, it looks at whether a contract would make sense
without the business efficacy. In the case of Moorcock, it was argued that
there was a term implied in a contract for mooring a ship at the jetty under
which the owner of the jetty guaranteed that reasonable steps had been taken in
checking the depth of the water and therefore it was safe for the claimant to
moor their ship. the ship became damaged due to the rocks and uneven surface on
the riverbed. The court implied a term in fact in this case and found that the
river bed would be save for mooring. The court introduced the business efficacy
test and it is necessary in given a contract business effect. 4

The second test the ‘officious
bystander’ was suggested by Mackinnon LJ in the 1939 case of Shirlaw V Southern
Foundries where it was argued and accepted that there was an implied term in a
contract. Shirlaw was a managing director employed on a 10-year fixed term
contract. When the company was taken over by another company they altered their
pre-existing articles and permitted two directors and a secretary to remove a
director regardless of the terms set out in their contract. The company argued
that they had a right to amend their articles of association under the S10
companies Act 1929. They had followed all the standard procedure and given the
statutory right to amend their contracts without the interference of courts. The
court held that it was implied terms of his employment that he wouldn’t be
moved from his role as managing director during his 10-year fixed term contract
and won damages for breach of contract.5

Terms implied in law works a
bit differently, as they act like a ‘default rules’ for well-established types
of contractual relationships, i.e. between an employer and employee, an
insurance company and a customer purchasing insurance from that company, a
builder and client, a landlord and tenant etc. A default rule is the standard
layout of a contract that automatically transfers a large number of terms into
a contract without the need of negotiations. the case of Liverpool City Council
V Irwin 1977 placed an emphasis on only implying a term by law into a
contract when ‘it’s necessary to do so’ by courts. The plaintiff sued the
defendant for non-payment of rent and she counter-claimed for breach of a duty
to repair the common parts of the flat, the stair case, lifts and rubbish
flutes. Nonetheless, the tenancy agreement didn’t make any mention of a duty to
repair any part of the flat but did impose an obligation on the tenants. The
House of Lord ended up implying in this case that the landlord (City council)
had to take reasonable care to maintain common parts of the building and from
this arose a legal incident in contract6.


Employee’s duties

An important implied term is
the duty to maintain mutual trust and confidence. In employment tribunals, this
is the most commonly relied upon implied terms and is often quoted by employees
who claim constructive dismissal. The employer must not act in a way that could
lead to a damage or destroy the relationship with the employee. This was
demonstrated in the Tullet Prebon Plc V BGC Brokers 2011 case in which the
court of appeal stated that the obligation of trust and confidence can arise
even before the commencement of employment. 7.
Other examples of these are verbal and/or physical abuse, sexual harassment and
fair treatment. In Yapp v Foreign & commonwealth Office 2013 the
plaintiff was suspended followed by a written warning, the defendant breached
the ‘obligation of fair treatment’ in not conducting some basic investigations
on the allegations of sexual misconduct against the claimant8.

The duty of fidelity requires
the employee to serve an employer faithfully at the best of their ability and a
duty to be efficient and avoid negligence at work. (Dunn and Another v AAH Ltd
2010. 9This
only applies in most cases during employment, not after termination of
employment. In Penwell Publishing UK Ltd V Ornstein and Others the high court specified
that when an employee, (in this case, a journalist) creates personal or
business contacts on his employer’s computer system, the list and database will
belong to the employer. The employee was also in breach of good faith and
fidelity, as he was in a situation where he could’ve prevented an ex-employee
from taking business away to a new company but failed to do so.10
In Faccenda Chicken Ltd 1986 the defendant was a sales manager of the
plaintiff and when his employment was terminated, he set up a similar business
selling chicken. He took 5 of the companies’ salesmen (which equated to half of
the salesmen), two admin staff and the supervisor and started to compete with
the plaintiff. The company sued Fowler for breaking his contract, in particular
the implied good faith by copying a list of the customers and sought an
injunction to restrain Mr Fowler from using confidential information. The court
found in favour of the defendant and dismissed the case and specified that the
sales information did not amount to trade secret and therefore not protected.
If a company has ‘confidential information’ they don’t want an employee to
disclose after termination they are advised to state that in their express
terms and it has to be an actual ‘trade secret’ not general knowledge.11

When it comes to
whistleblowing, there may be some circumstances where if an employee believes
that it is ‘in public interest’ to release information (which would potentially
breach trust and confidence) they are protected under Employment Rights Act
1998. In Chesterton V Normohamed 2017 the Court of appeal upheld the decision
of the tribunal and EAT, finding that a claimant can make a disclosure  of public interest, even if by ‘public’ it
only consist of the employees within same workplace12.
Legislation on this was passed in 1998 on protected disclosure and is now part
of the ERA part IVA. According to section 43B, the following breaches have to
be identified and disclosed to an individual’s employer or to some other person
who holds some responsibility for the matter –

Damage to environment

Criminal offence

Danger to health and safety of any individual

Miscarriage of justice

Breach of legal obligation

Purposely hiding information regarding any of
the above mentioned matters

Good faith is no longer
required for making protected disclosure and it does not matter that after
investigation the worker’s disclosure is found to be mistaken. However,
Employment Tribunals can deduct 25% of an award if the protected disclosure is
found to be made in bad faith or personal gain13.
In the case of Cavendish Munro Professional Risks Management Ltd v Geduld
2010, the court ruled that facts had to be produced and ‘allegations’ alone,
are not sufficient14.

Employer’s duties

Employers have a duty to pay
wages to an employee and a failure to pay wages that are agreed and due to an
employee, is regarded as a breach of their contract of employment. This implied
term is usually set out as an express term, however, if the contract does not
state this or has incorrect pay on this, then legislation will imply a term
that the claimant is entitled to at least the minimum wages for the work
provided as demonstrated in Driver V Air India 201115.
An employee has a right to resign in these circumstances and claim for
constructive dismissal.

There is no general obligation
for an employer to provide work for an employee as long as their wages are paid
but there are some exceptions to this. Firstly, do their earnings depend on the
work performed by the employee and do they require work to maintain those
skills. Secondly, if an employee holds a senior position and not being able to
work can lead to potential loss of publicity or reputation.

Employers are also expected to
take reasonable care of an employee, not just physical care, also potential
psychiatric harm such as stress as in the case of Dickins V O2 200916

Employers are also required to
not breach trust and confidence and employers have a duty to not destroy the
‘mutual trust and confidence’ between the two parties without reasonable and
proper cause (Courtaulds Northern Textiles Ltd v Andrew 197917.

An employer is not obliged to
provide a reference by law, however where they are providing a reference, a
duty of care is owed to the ex-employee to receive a true, fair and accurate
reference (Bartholomew v London Borough of Hackney 199918.
If a reference is given, implied terms states that the employer will exercise
reasonable care in providing a reference, if a job is lost due to reckless
reference from ex-employer, damages can be recovered for breach of this implied


 Some conditions that have to be satisfied in
the inclusion of an implied term are as follow- it must be reasonable and practical,
it must be necessary to give business efficacy to the contract, so that the no
term will be implied if the contract is effective without it, it must be clear
and obvious, clear of expression and it mustn’t contradict any express terms of
a contract. This was further expanded in the 2009 Privy Council case of Belsize
Telecom.19 In
this case, lord Hoffman suggested that implied term should be taken to as ‘what
the instrument, read as a whole against the relevant background, would
reasonably understood to mean’. Which suggested that that the rules on implying
terms had been relaxed. However, implied term was again narrowed in Marks &
Spencer Plc V BNP Paribas 201320
and most recent case of Irish Bank V Camden Market 201721,
which both focused on the ‘Cardinal’ rule that implied terms cannot contradict
any express terms.