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Formation of the contract of employment

19 July 2011

When we meet employer or employee clients for the first time, it is notable how many will tell us: ‘there isn’t a contract’, meaning they have never issued, or been issued with, a written contract. But this does not mean ‘there isn’t a contract’. Even if there is nothing in writing, a contract will always exist. Its terms can come from a variety of sources.

Contract terms

The most obvious source is terms expressly agreed in writing but this is not confined to any written contract issued by the employer. Such terms may, for example, be found in a company handbook (providing it is not stated to be non-contractual) or in correspondence, such as a letter advising a worker of a pay rise.

Terms may also be expressly agreed verbally, as when a job is offered or a change of role agreed. Although it is more difficult to evidence these, as long as the detail of what was agreed is sufficiently clear and certain, they will form part of the contract and, in some circumstances, can override written terms.

Employment Rights Act

It is also possible for terms to be implied into a contract. A section of the Employment Rights Act, for example, provides for a minimum period of notice. Terms can also be implied by facts such as those arising through custom and practice.

All this sometimes comes as a surprise to employers and employees alike. The best way to provide certainty and clarity is to have a comprehensive written contract, which is reviewed and updated when necessary with interim changes confirmed by letter.

For more information about employee contracts, please contact the employment and business immigration team.

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Jenny Hawrot LLB (Hons)
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Jenny Hawrot
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