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What is the importance of implied terms to the contract of employment

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Introduction

What is the importance of implied terms to the contract of employment? A contract of employment comes into existence once an employee's offer of services had been accepted, and the employer is required to issue a written statement of the main terms and conditions of employment1. Because the employment relationship is so extensive it is impossible to capture all the 'intentions' of the parties or 'necessities' of the employment relationship on that statement. This means that the contract of employment - in addition to being represented in other forms2 - is also governed by implied terms, which allow the courts to 'read in' certain terms that are necessary to make the contract of employment work. The test for implication of terms is 'necessity' 3 and not reasonableness4. There are three ways of incorporating implied terms into the contract of employment - by fact, by law, and custom5. A term implied by fact is specific to the particular contract of employment. It would be implied that a doctor working in a hospital holds a medical license to practise. Two tests are used to determine whether there is a term of specific implication - the business efficacy test of whether the term was necessary to make the contract work6, and the officious bystander test of where an officious bystander to suggest the express provision of the term he would have been suppressed with a common "Oh, of course!" because the term seemed obvious and necessary to both parties7. If the parties would not have agreed a term, case law suggests that it cannot be implied by fact8. The terms implied by law are obligations so fundamental that they apply to the status of being in employment. These type of terms will either be implied in statute, as with provisions in the Equal Pay Act 19709 implying a pay equality clause into the contract of employment, or by common law because "specific duties ought to be attached to the type of contractual relationship in question"10, such as an employee's duty to faithfully serve his employer11. ...read more.

Middle

Emp can only get protection if its incorporated Privity of Contract Roger Halson suggests that implied terms interfere with the privity of contract. His argument is that where there is a provision in the express terms which states that it will override any implied term, the courts have no business in 'interfering' because it damages the expectation of the parties in a contract which has already been agreed. A mobility clause, for example, is created on the expectation that based on the need for businesses to responding to changing circumstances, employees can be required to meet such change - to limit their effect by introducing an implied term restricting the right to move the employee to an area within travelling distance of is home36 is to work against the interest of the business. Halson also argues that most of the implied terms are too general and overlap with one another. The duty of fidelity covers the use of confidential information, making a secret profit and duty to work normally, duty to account, loyalty, goodwill, good faith p129, Ch 7. This gives the courts unlimited discretion to formulate 'meaningless' policies rather than imply terms as the particular employment relationship requires. He argues that the obligation of trust and confidence is a dangerous concept because it 'relates to a state of mind that cannot be assessed'37, and is capable of 'suspending' all the other terms of the contract over the flimsiest38. Halson concludes it unlikely the courts will treat express terms as overriding implied terms in order to maintain the 'grip' they have on interpretation of contracts. While I agree with Halson on the issue that some of the implied terms overlap thereby creating too much of a wide scope for 'reading into' the employment contract, there can be no doubt about the importance of the implied terms to the contracts of employment not least because they help to compensate the employee for his unequal bargaining power in negotiating the contract of employment. ...read more.

Conclusion

332 33 Employment Rights Act 1996, s100 34 Johnstone v Bloomsbury HA [1992] Q.B. 333 35 Rigby v Ferodo Ltd [1988] I.C.R. 29 36 Courtaulds Northern Spinning v Sibson [1988] I.C.R. 451 37 Ibid at page 134 38 In Bliss v South East Thames RHA [1987] I.C.R. 700 the claimant successfully argued that he had been unfairly dismissed when dismissed for refusing to take a psychiatric test because of his previous conduct; in Newns v British Airways Plc [1992] I.R.L.R. 575 the claimant hoped to successfully argue that his contract of employment had been breached when the employer transferred the business without consulting him 39 There is no doubt that the employer still wields more influence in the employment relationship but at least managerial power is now subject to implied duties and obligations. 40 Estimated to be 28.27 million as at January 2004 by the Office of National Statistics 41 Estimated at 3.6 million as at January 2004 by the Office of National Statistics 42 R v Lord Chancellor's Department ex parte Nangle [1992] 1 All ER 897 43 Dickson v Combermere (1863) 3F, F527 44 Ridge v Baldwin (No.1) [1964] A.C. 40 45 Coker v Diocese of Southwark [1998] ICR 140 46 Obligations of fidelity and confidence, and the payment of weekly wages. 47 McMeechan v Secretary of State for Employment [1995] I.C.R. 444 48 Farleigh v Secretary of State for Trade and Industry 2000 WL 1212905 49 Malik v BCCI [1998] A.C. 20 50 Such as pay equality clause, maternity rights, sick pay etcetera 51 [1995] I.R.L.R. 493 52 53 The employer paid the workmen a wage on an hourly basis and could dismiss them, and could tell the claimant what to do and where to do it. 54 (Daley v Allied Suppliers [1983] I.C.R. 90) 55 That implied term was available to the employee in Webb v EMO Air Cargo (UK) Ltd (No.2) [1995] 1 W.L.R. 1454 56 Smith v Stages [1989] A.C. 928 57 Salsbury v Woodland [1970] 1 Q.B. 324 ?? ?? ?? ?? ...read more.

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