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The terms of a contract

The terms of an employment contract set out what you and your employer can expect of each other.

Contract terms

Contract terms can come from a number of different sources. For example they could be:

  • verbally agreed
  • in a written contract, or similar document
  • in an employee handbook or on a company notice board
  • in an offer letter from your employer
  • required by law, like the requirement by your employer to pay you at least the minimum wage
  • in collective agreements
  • implied terms

If there's anything in your contract that you're unsure about, or which is confusing, ask for it to be explained to you. It should be made clear what forms a legally binding part (that is, a 'term') of your contract and what does not. For example, your company handbook may set out a procedure that your employer will aim to follow if they can, but that is not legally binding. If either you or your employer breaks a term of the contract, the other is entitled to sue for breach of contract.

Collective agreements

Employers sometimes make agreements with a trade union or staff association. These are known as collective agreements. Your contract should make it clear which agreements apply to you and who can negotiate on your behalf. These agreements can apply to you even if you're not a member of the trade union or staff association.

Implied contract terms

Implied terms aren't written down anywhere, but are understood to exist. If there's nothing clearly agreed between you and your employer about a particular matter, then it may be covered by an implied term. Terms are implied into a contract for a number of reasons.

Terms that are necessary to make the contract work

Terms can also be implied because they are necessary to make the contract work. The most important of these is the 'duty of mutual trust and confidence'. This means that you and your employer rely on each other to be honest and respectful. For example, your employer trusts you not to destroy company property and you trust your employer not to bully you.

Terms that are obvious or assumed

Some terms are included either because they are so obvious that it is not felt necessary to write them down, or because it will be assumed that such a term exists.

An example of this might be where a contract provides for sick pay without saying how long it will be paid. It will be assumed that it is not intended to be paid forever.

Terms implied by custom and practice

These are specific to an employer or kind of work. They are arrangements that have never been clearly agreed but over time have become part of the contract.

For example, you might get a Christmas bonus every year, or the business might close early on particular days. If a company practice has become a part of your contract then your employer must stick to it and cannot normally change it without your agreement.

Whether a particular practice has become a part of the contract can be very difficult to decide. There is no fixed time limit after which something is definitely part of the contract. Among other things, it depends on:

  • how seriously it has been treated (has the employer acted like they have a choice?)
  • how clear it is (has the employer treated the matter differently each time?)
  • how long it has been in place

If your employer changes the terms of your contract

Generally there must be agreement between you and your employer in order to change a contract.

If your employer is bought by another company, or moves to a new location, your existing terms and conditions should continue, although the new owners should give you an amended written statement in their name.

Where you can get help

The Labour Relations Agency (LRA) offers free, confidential and impartial advice on all employment rights issues. You can contact the LRA on 028 9032 1442 from 9.00 am to 5.00 pm Monday to Friday.

Your local Citizens Advice Bureau (CAB) can provide free and impartial advice.

If you are a member of a trade union, you can get help, advice and support from them.

Seek legal advice from a solicitor or advice agency on contract conditions.

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