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Implied terms: the invisible part of Contracts of Employment

Business owners generally know that a contract of employment contains express terms that regulate the employment relationship. Fewer employers are aware that express terms contained in written contracts of employment are not the only terms that regulate the employment relationship.

Common Law has long held that terms can be implied into an employment contract as a matter of law or industry practice. Implied terms could best be described as the “invisible” Common Law duties and obligations binding on employers and employees.

Under Common Law, there is an implied term in a contract of employment that intimates the relationship between employer and employee is based on “mutual trust and confidence”. This essentially means an employer may not take advantage of an employee by exploiting or taking advantage of the employee.

Employees also have implied duties in the performance of their duties. Implied duties include:

  • the duty to obey lawful and reasonable orders from an employer
  • the duty to perform their duties with skill and care
  • the duty of “fidelity and good faith”, which ensures that the employee only conducts himself or herself in a way that is consistent with the employment contract
  • the duty not to disclose any confidential information that has come from the employment relationship
  • the duty to do additional work as requested by an employer, and if the contract of employment allows such actions.

Including the right express provisions for your business in contracts of employment goes a long way to clarifying employee obligations and avoiding workplace disputes. Smart employers also make themselves aware of implied terms when they are faced with taking disciplinary action against an employee. Knowing your rights and when to apply these can make your life as an employer much easier when it comes down to the difficult conversations with employees. And who doesn’t like easier?

Bare Bones Consulting works with you to review your current HR documents, identify what you may be missing and provide you options tailored specifically to your business. Our expertise is based on simplifying things whenever possible…we know you have better things to do with your time than worry about your HR so why not let us help you out? Click here to find out more.

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Note: Bare Bones Consulting provides HR services for employers. Employees seeking advice on workplace concerns should contact the Fair Work Infoline on 13 13 94.