Contracts of Employment
A contract is an agreement between 2 or more people or organisations that satisfies a number of legal requirements. A contract of employment is a contract just like any other – but the particular nature of the relationship between employee and employer means that some considerations apply only or particularly to employment contracts.
An employment contract does not have to be in writing. If you work for your employer and you are paid for the work you do, you (probably) have a contract of employment. But it might be difficult to know what all the terms of that contract are.
Obviously it is good practice to have a written contract of employment.
The Employment Rights Act 1996 requires an employer to provide basic information about the employment (e.g. pay, place of work, hours of work) in a written statement of terms and conditions.
Types of Contractual Terms
It is important to know what terms govern the relationship between employer and employee.
Most terms and conditions are called express terms. They are the terms that the employer and employee have agreed about. They will often be set out in the written contract of employment.
If the written terms of the contract are clear, it is often very difficult to show that other terms in fact apply.
But not all terms are express terms.
Some terms can be assumed to have been agreed. These are called implied terms.
A term may be implied where it is obvious that the employer and the employee meant to agree it.
Sometimes it is possible to say that a term has arisen through ‘custom and practice’ – but just because a certain thing has been done in a certain way for a certain time, it does not necessarily follow that that is a term of the contract.
Express terms tend to override other sorts of term.
Sometimes terms and conditions are incorporated by reference e.g. to a Collective Agreement or Staff Handbook.
Collective Agreements
If your contract says that it incorporates (i.e. includes) the terms of any agreement made between the employer and a Trade Union, you need to look at that “collective agreement” to see what terms apply to you.
Typically, things like pay or hours of work or holidays will be agreed collectively, and often a new agreement is made each year (e.g. to deal with pay rises).
Not every term in such a document will be incorporated into the contract of employment. The law asks the question, is a given term “apt” for incorporation? The question can be difficult to answer. You will usually need expert advice.
Changing the Contract of Employment
As a general rule, each party to a contract can expect the other party not to try to change the contract without agreement.
Of course employers and employees are free to negotiate new terms and conditions if they can agree about them.
In the simplest of cases, any change to the contract will be evidenced in writing. A new contract might be signed, or there might be an exchange of correspondence which shows what new terms have been agreed. A memorandum to the workforce or even an email might show what has been agreed.
Although it is always best to ensure that changes are made in writing, not every change has to be written down.
For example, if the employer changes the contract to benefit the employee, and the employee continues to work on the new terms, that will signify that the contract has effectively been varied.
Think about what happens when you get a pay rise. It is not necessary expressly to say to your employer “I accept this change” – but nevertheless when you continue at work the contract is varied to reflect the increase in pay, and the employer pays you the new wage or salary.
If you accept other changes (e.g. as part and parcel of a pay rise) by continuing to work on the new terms, it will be difficult to ‘cherry pick’ the good from the bad. Your continued performance of the contract will usually indicate that you have agreed to all of the new terms – including the ones that are less beneficial.
Sometimes an employer will make changes that are not at all beneficial. If you continue to work under the new terms and conditions, your employer may be able to argue that, through inaction, you have “acquiesced” to the changes. You should get advice from your Union before you continue to work under terms and conditions that you have not agreed to accept.
Sometimes employees will agree to work under new terms and conditions for a period e.g. whilst negotiations about the changes are resolved. It is often said that they are working “under protest”.
It is dangerous simply to continue to work whilst saying “I am working under protest”. You run the risk that the employer will still be able to argue acquiescence. “Working under protest” in itself is not usually a solution to the problem. It can be a useful position to take whilst negotiations continue – but it is not a guarantee that your old terms and conditions will be preserved.
If your employer changes your terms and conditions in a fundamental way, without your agreement, it might be possible to make a claim for unfair dismissal. Such cases are called ‘constructive dismissal’ cases and are often very difficult to prove. You should always seek advice before thinking about going down this route.
Employment Tribunals
If your employer does not provide you with a written contract of employment you can apply to the Tribunals for an order setting out the terms under which you are employed.
You may also be able to make a claim in the Tribunals in respect of other contractual entitlements. For example, if you are not paid your full contractual wages, you may be able to make a Tribunal claim for “unlawful deductions from wages”. Sometimes claims have to be (or are better) brought in the County Court.
For more information on contracts of employment and other Employment Rights, please call our Employment Rights team on 033 3344 9603 or email Paul Scholey or David Sorensen.
This is a general guide, and is not intended to be a substitute for legal advice. If in doubt, seek help from an expert.
