Employment Contract – Implied terms

Often employers and employees are not aware of the implied terms in an employment contract.

Implied terms are terms that do not appear in words or phases but are given legal effect by the law.

Common implied terms are: –

• A mutual obligation to adhere to the duty of confidentiality
• Custom and trade practices in contracts
• Any other terms out of necessity to give the contract business efficiencies

 

Confidentiality

The duty of confidentiality applies to both employees and employers even if not stated in an employment contract it is implied by the nature of the relationship.

Both employers and employees are to keep information gained in the course of employment confidential. Confidential information has been known to be:

• Mailing customer list
• Customers preference on delivery times and stock
• Trade secrets or formulas

There can also be other confidential information specific to the industry or profession.

 

Custom and Trade practices

These are industry specific norms that even if not stated in an employment contract are implied as a matter of fact.

For instance, employers at Taronga Zoo had the long-time practice of taking a day off each month (known as flexi days) in exchange for the non-paid additional hours they worked. Even though no express right exited in their employment contract for flexi days, the Industrial Relations Commission found there was a well-established practice and it had been implied as a term in their employment contracts.

 

However, there are specific pre-requisites for trade and custom to be implied they include for instance: –

• The custom must be ‘so well known’ to everyone in the industry even though need not be universally accepted.
• An express term is not present that contradicts the custom and/or trade practice

An employer may still be bound by the custom even though he/she personally was not aware it existed

 

Implied terms out of necessity

Implied out of necessity will mean the term is necessary to give the employment contract effect as well as be reasonable, and equitable. AND must not contradict an express term in the employment contract.

Moreover, the Law has stated that implied terms are terms that are ‘so obvious it goes with saying’ or is necessary for the operation of the contract.

 

If you or someone you know requires advice with an employment contract, contact Rep-Revive Employment Lawyers® for an initial consultation.