Firstly, a quick explanation about what your contract is! A contract of employment is an agreement between you and your employer. There is always a contract between you and your employer, even if you do not have anything in writing, because you have agreed to work for your employer in return for them paying you.

The terms of an employment contract set out what you and your employer have agreed and what you can expect of each other; your rights and duties. There are several different types of terms and some do not need to be written down in your employment contract (although it is always best for them to be in writing to avoid confusion).

Where do contract terms come from?

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

  • Verbally agreed (these are called ‘express terms’)
  • In a written statement, contract or similar document. Key terms, such as work, location, hours, pay, holiday and notice periods legally have to be given to the employee in writing by the end of their second month of employment in the form of a written statement (these are also called express terms)
  • In an employee handbook or on a company notice board (also express terms)
  • In an offer letter from your employer, when you started work (also express terms)
  • Required by law, for example, your employer must pay you at least the minimum wage, give you the right to holiday entitlement.
  • In collective agreements (which are agreements between your employer and a trade union or staff association – you should be told which agreements apply to you – whether you are a member of the trade union or not)

Implied Terms

There are also ‘implied terms’ in your contract that are probably not written down anywhere, but are understood to exist because of the conduct of the parties. They should be fairly obvious to both parties to the contract. 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 in order to make the contract work, because they are obvious and by custom and practice. To see more details about custom and practice and what this means read our Guide here.

One of the most important implied terms is that of the ‘duty of mutual trust and confidence’.

This means that you and your employer rely on each other to be honest and respectful and should not, without reasonable and proper cause, conduct yourselves in a manner calculated to destroy or seriously damage the mutual relationship of confidence and trust between you.

From an employee’s point of view – you agree to serve the employer loyally and in good faith and not to act against the employer’s interests. This term exists throughout the employment, and includes:

  • Not misusing the employer’s property or resources
  • Not soliciting the customers or clients of the employer in order to transfer their custom to you the employee once you have left employment
  • Not setting up in direct competition with the employer (although the duty does not prevent an employee from seeking alternative employment whilst still employed)
  • Not disrupting the employer’s business

If an employer believes an employee has breached this term of trust and confidence and the breach is serious and substantial they can dismiss you.

From an employers point of view – they have obligations that cover many situations in which a balance has to be struck between an employer managing his business as he sees fit, and the employee’s interest in not being unfairly or improperly treated. Examples of what may constitute an employer’s breach of the duty of trust and confidence include:

  • Unjustified criticism and / or continual criticism of the employee over a period of time
  • Failure to investigate properly an employee’s grievance
  • Reprimanding a senior employee in front of other employees
  • Failure to follow company procedures
  • Unreasonable and unjustified workplace monitoring / surveillance of employees
  • Deceiving an employee
  • Limiting an employee’s authority in key areas
  • Falsely accusing an employee of theft on the basis of flimsy evidence
  • Giving unjustified warnings in order to dishearten an employee and drive him or her out of employment
  • Causing psychiatric injury to an employee

In essence, the duty covers the concept of fair dealing on the part of the employer. If the employer fundamentally breaches this trust and confidence, an employee may be justified in treating his or her contract as having been unlawfully breached which may enable them to resign and claim constructive dismissal.

If there has been a breach of Trust and Confidence

So what happens if an employee or employer breaches any of the implied terms of employment?

This will depend on the implied term in question and the seriousness of the breach. Employees are likely to use the breach to claim damages or as a means of justifying a constructive dismissal.

Employers are more likely to use a breach as a reason for instituting disciplinary action and/or justifying dismissal.

If you are an Employer and need ongoing professional help with any of these issues then talk to us at The HR Kiosk (click here)- a Human Resources Consultancy for small businesses – you can retain us for as much time as you need.

Workline is supported by Employment Lawyers Goodman Derrick LLP.  Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

Photo by Erik Maldre