A contract of employment must still meet the basic formal requirements that apply to all legally binding contracts - including offer and acceptance, consideration and an intention to enter into a legally binding agreement.
The contract of employment is usually a written contract and may contain express terms of employment but also certain terms that are implied into all employment contracts. Express terms may also be incorporated by reference to other documents such as staff handbooks containing contractual terms as well as non contractual policies or collective agreements.
Examples of terms which are implied into all contracts as characteristic of the employment relationship include terms such as:
- the employee’s duty to give personal service
- a duty of fidelity
- to work in good faith; and
- the employer’s duties to pay for work done and to preserve a relationship of mutual trust and confidence with the employee.
Where a contract is silent as to a term that would not normally be implied, but where a court believes the parties intended them to apply, a court can imply other specific terms. Statue may also impose further obligations on the parties and further protections for the employee such as the statutory minimum notice periods.
Whilst there is no statutory requirement to have a written contract of employment there is a requirement that the employer provides to the employee certain written particulars of the contract terms so that they are aware of the main terms of their employment. Failure to provide this basic written information within two months of commencing employment or within 1 month of changing the terms, can result in a claim against the employer.
In some circumstances it is possible for employers to vary the terms of an agreed contract of employment but in other situations this can result in a valid claim for constructive dismissal. Likewise in some circumstances employees can have their employment lawfully terminated for failing to agree a reasonable change to their terms of employment having regard to the specific circumstances. Both employers and employees should take legal advice before either attempting to vary the terms of employment or refusing to accept the same.