This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to employment contracts and implied terms in England and Wales, explaining how express and implied terms arise, common examples such as trust and confidence, how implied terms interact with written contracts, and what happens when implied duties are breached. Authoritative explanation for workers and solicitors.
An employment contract is a legally binding agreement between an employer and a worker or employee setting out the rights, duties and obligations of both parties. While many terms are agreed explicitly by writing or verbally, others form part of the contract without ever being written down. These implied terms are essential to the functioning of the employment relationship and carry the same legal force as express contractual provisions. Understanding both express and implied terms helps workers and employers know their rights, avoid disputes, and recognise when a breach of contract may have occurred.
What Is an Employment Contract?
An employment contract may be written, verbal, or a combination of both. It is legally formed when a job offer from the employer is accepted by the worker, and it defines the express terms - such as pay, hours of work and holiday entitlement - that the parties expressly agree.
Under the Employment Rights Act 1996, employers must give workers a written statement of employment particulars on or before their first day of work. This document is not the whole contract but sets out key express terms the worker should know.
Employment contracts also include terms that arise automatically by law or through conduct; these are known as implied terms.
Express Terms: What You and Your Employer Agree
Express terms are provisions that are specifically agreed between the employer and worker. They can be either written (for example in the written statement of particulars or contract document) or oral. Common express terms include:
- Rate of pay and pay frequency
- Hours of work and place of work
- Holiday entitlement and holiday pay
- Sick pay and other benefits
- Notice periods and termination provisions
- Pension arrangements
- Disciplinary and grievance procedures
Express terms may also incorporate policies, procedures and contractual rights set out in employee handbooks or staff manuals - but only if the contract makes clear they form part of the contract.
Implied Terms: The Unwritten Yet Binding Rules
Implied terms are provisions that are not explicitly agreed but are considered part of the contract because they are fundamental to the employment relationship. They arise from three main sources:
- By law (statute or common law) – terms that the law imposes automatically whether or not the parties intended them.
- By the circumstances of the contract – terms necessary to make the contract workable or so obvious that they “go without saying”.
- By custom and practice – terms that have become established in a workplace over a long period.
Statutory and Common Law Implied Terms
Some implied terms stem from legal obligations that apply in every contract of employment, whether written or oral. These include:
- Duty of mutual trust and confidence - both employer and worker must not act in a way that seriously damages their mutual trust and confidence.
- Duty of care - an employer must take reasonable care for the health and safety of its employees.
- Duty of fidelity and good faith - the employee must act loyally and not harm the employer's business or misuse confidential information.
- Minimum statutory rights - such as the right to the National Minimum Wage, minimum holiday entitlement and protection against unlawful discrimination.
These terms are imposed by law and cannot be excluded by contract, even if an express term attempts to do so.
Terms Implied by Fact
A term may be implied by the conduct or intention of the parties if it is necessary to give the contract business efficacy or so obvious that the parties must have intended it. For example, where a job requires an employee to drive as part of their duties, an implied term may be that the employee holds a valid driving licence.
Custom and Practice
A term can be implied if it has become established in the workplace over time - known as custom and practice. For a term to be implied this way, it generally must be:
- Long‑standing and consistent;
- Notorious or widely recognised in the particular workplace or industry;
- Applied without exception such that parties assume it as part of the contract.
An example might be an employer consistently paying an enhanced bonus or redundancy sum over many years.
Relationship Between Express and Implied Terms
Implied terms cannot contradict express terms when they cover the same subject matter. A tribunal or court will give effect to express terms first; if the express contract is silent on an issue, an implied term may fill the gap.
However, implied duties such as mutual trust and confidence operate alongside express terms and can frame how express provisions are applied. A contractual right that is exercised in a way that undermines mutual trust may breach the implied term even where the express term is not overtly violated.
Examples of Implied Terms in Practice
Mutual Trust and Confidence
This is one of the most important implied terms. If an employer's conduct is so unreasonable that it destroys the trust between the parties, an employee may resign and claim constructive dismissal.
Employee Fidelity and Good Faith
Employees are expected not to act against the interests of their employer, misuse confidential information or derive secret profits from their employment.
Health and Safety Duty
Although specific health and safety obligations are also covered by statute, the implied term reinforces the employer's duty to provide a safe workplace.
Customary Payments
Regular payments such as annual bonuses paid consistently over time may become part of the contract through custom and practice.
Breach of Implied Terms and Legal Consequences
A breach of an implied term can give rise to legal claims:
- Breach of contract claims - for financial loss or failure to honour implied duties.
- Constructive dismissal claims - where an employer's breach of implied trust compels an employee to resign and treat the contract as terminated.
- Employment Tribunal claims - where statutory implied terms such as equal pay or minimum wage are breached.
Tribunals and courts assess whether a term was indeed part of the contract, how it was breached, and what losses resulted. Evidence such as conduct, custom, company practice, and statutory obligations may inform the tribunal's decision.
Practical Steps and Best Practice
Review Written Terms
Ensure that the written contract clearly sets out key express terms and reflects any bespoke arrangements agreed between both parties.
Document Custom and Practice
Where workplace practices are longstanding and regular, employers and employees should document them to reduce disputes about whether they form part of the contract.
Seek Clarity Before Changes
Contractual changes should be agreed with the employee and recorded in writing. Unilateral changes without agreement can risk breach of express or implied terms and potential tribunal claims.
Understand Legal Limits
Implied terms arising from statute or public policy cannot be excluded by express terms. Employers should annually review contracts for compliance with statutory changes in areas like holiday entitlement, minimum wage, and discrimination protections.
Common Questions
Does every employment contract contain implied terms?
Yes. All employment contracts contain implied and statutory terms, even if these are not set out in writing.
Can an employer vary an implied term?
Not unilaterally. Variation requires mutual agreement unless the contract provides a lawful mechanism for change.
Are implied terms enforceable?
Yes. Implied terms form part of the contract and can be enforced through tribunal or court claims where breached.
Key Takeaways
Employment contracts in England and Wales consist of express terms agreed by the parties and implied terms that arise by law, necessity, or practice. Express terms define the clear rights and obligations agreed at the start of employment; implied terms fill gaps, uphold fundamental duties such as mutual trust, and reflect customary practices or legal requirements. Understanding both express and implied terms is crucial when considering contractual rights, potential breaches and legal claims, whether in an Employment Tribunal or a civil context. Clarity in written contracts, careful documentation of workplace practices, and adherence to statutory rights all help reduce disputes and protect both employers and employees.
