Employment Law Issues - Case Study Example

………………………………….. College/ …………………………. ………………………………………….. EMPLOYMENT LAW Roles that implied terms and collective agreements play in the formation of terms and conditions of employment contract Word count: 1987 Introduction Understanding the legal implications and roles of terms in contract of employment has become highly important in regulating employer-employee relation at workplace. A legally binding employment contract, with both expressed and implied terms, will allow the employer to specify the duties and responsibilities that are expected from the employee or are assigned to him and to litigate any legal risks that can occur between employer and employee. This research paper attempts to describe the fundamental roles that implied terms and collective agreement play in the structure of employment contract. This paper finds that implied terms, as it has long been considered to be integral component of the structure of employment contract, plays vital role in the formation of terms and conditions that are applicable to the employment contract. The research is structured considering the doctrine of precedence and the employment relationship. Employment Contract An employment contract forms to be the basis on which an employee is employed under an employer. If there is no employment contract, the employee cannot be categorized to be an employee (Bell, p. 27). The employment contract is legally binding relationship between an employer and his employee that defines the structure and contents of the relationship between each of them and it strengthens all the claims to employment tribunals and litigates legal risks and liabilities (Leighton, p. 11). Recruitment, one of the fundamental functions of HRM, is a basic step to create an employment contract and relation between employer and employee and this, if conducted effectively, can ease the procedure of forming employment contract by including relevant terms and contents in it. The contract of employment is very similar to any other legal contract in many aspects. Generally, a contract of employment will be expressed in writing, but this not the case always as in the case of other contracts (Bell, p. 28). It is legally and strongly advisable to the employer to issue a written contract so that it will help mitigate all legal risks associated with employment and also to avoid misunderstandings between both the parties. There can be temporary of full time employment contracts as well in which contract is agreed between the parties that it will end within a specific period of time or it is of unlimited duration (Macdonald, p. 36- 37). Roles of implied terms in an employment contract The contract of employment may consist of a number of terms and conditions and these can either be expressed or implied. Expressed terms are those that both the parties have agreed on orally or in writing. Implied terms are those terms that are not expressed in the contract, but are legally binding as courts accept them as being included in the employment contract for various reasons. Shirlaw v Southern Foundries (1926) case law introduced the officious bystander test in which terms of the contract were so obvious that they are held to be part of the contract and hence they are not necessarily to be expressed in the contract (Bell, 29). Oughton and Davis, based on the conclusion of the above stated case law, emphasized that the right or responsibility of a court to find the existence of an implied term in a written contract should carried out with extra care. The requirement seems that both the parties must agree to the terms implied (p. 225). Carrigan argued that the contract of employment contains basically two types of implied terms. In one way, there are terms that are implied in fact. In this category of implied terms, judges fill perceived gaps with implied terms in the contract. On the other hand, there are implications of law that may come from the employer-employee relationship. The standard terms are imported in to employment contract regardless of what the parties perceive and are willing (P. 76). Chandler and Waud outlined the underlying principles to identify whether there is an implied term in the contract. The principles are: Whether such an implied term has been necessary in order to give the contract business efficacy, and Whether it has been agreed by both the parties and whether they had applied their minds to such term while they entered in to the contract (p. 115) Bell identified four major implied terms that an employer must comply with. They are: 1) Duty to pay wages, 2) Duty to exercise reasonable care, 3) Duty to provide a grievance procedure, and 4) Duty to maintain mutual trust and confidence between them (p. 37). As for the first one is considered, wages are the major consideration for the work done by the employee and it must be reasonably paid even if it is not expressed in the contract. The wage can be paid in any forms of cash payment, cheque payment or credit or bank transfer etc. As far as the duty to pay wage is considered, when an employer suspends an employee without paying wages would be considered as a breach of contract on the part of the employer because paying the wage is an implied contract unless such procedure was allowed by the expressed terms in the contract. In the case law between Bird and British Celanese (1945), an employee was suspended for two days which was in accordance to the practice of the business and it was held valid (Suff and Bone, p. 30). An employer is legally liable to take care of the employees. Employees’ safety must be taken seriously by the employer and employer will be liable for any direct or indirect breach of the contract. The case law between Wilson and Clyde Cool Co Ltd v English (1938) shows that employer is liable for employee’s safety in the workplace. In the case, the House of Lords laid down that employer is liable for care which includes a duty to provide and maintain safe plant and equipment, safe system and methods of work and competent staffs of fellow employees (Suff and Bone, p. 32- 33). In Goold v McConnel (1995), the court has held that employer is legally responsible to provide grievance to the employee and failure to do so will be considered as breach of the implied term in the contract of employment (Suff and Bone, p. 33). In the above case law, the sales men had approached the employer a number of times to discuss grievance with regard to a new sales scheme. Once company failed to respond accordingly, the salesmen resigned the job and claimed dismissal. The court held that employer is responsible for providing grievance. Chandler and Waud emphasized that an employer will be held liable if he failed maintain mutual trust and confidence with his employee. In Bracebridge Engineering Ltd v Darby (1990), a female employee complained to her manager that two supervisors had sexually abused and assaulted her. When the manager failed to or refused to act on the complaint, it undermined her confidence as well created unrest among other female workers. In this case, it was held that the complainant had every right to quit the job and present complaint to tribunal as well (p. 116). Carrigan argued that the implied term in the employment contract regarding the duty of maintaining mutual trust and confidence seems to be a new term that has been imposed an obligation on employers not to engage in any conducts that are potential to damage or destroy the trust and confidence between both of the parties. This implied term has gained increased importance in judicial and academic circles because the duty of the employer to maintain trust and confidence with employee was viewed as prefiguring an era of fairness in the common law of employment (p. 78). Doctrine of precedence and implied and expressed terms It is well established and well-known in the law that express terms in any contract take precedence over implied terms. In Johnson v Unisys Ltd (2001), the court has held that implied terms can supplement express terms of a contract but it cannot overrule them (Macdonald, p. 57). The implied terms in an employment contract like duty to take care of safety of the employee or duty to maintain mutual trust and confidence will be legally binding only if there are no express terms that allow employer to do the other way. The doctrine of precedence refers to the central of the common law system by which courts are bound by prior decisions of higher and superior courts. Even when social things are being changed, the judicial decisions will be remained in the legal culture. While adhering to the precedence, it helps achieve maintaining stability in the legal system. As far as implied and expressed terms in an employment contract are concerned, expressed terms will have precedence over the implied terms. Expressed terms will be privileged as these are clearly written or orally expressed terms. Roles of Collective agreements in employment contract Collective agreements are the agreements negotiated between an employer or employers’ association and trade union. Some clauses and terms in the collective agreement like those that deal with pay rises etc may influence the contract of employment in a way that such terms will become part of the employment contract (Lockton, p. 41). In short, collective agreements are very significant and highly critical while forming the employment contract because some of the terms in the collective agreements must be considered by both parties while forming the contract. Collective agreements become terms of the individual contract of employment either as expressed or as implied. When employees expressly agree to be bound by collective agreement, it is express incorporation or otherwise implied incorporation. The basis of implied incorporation is that both the parties have accepted the agreement as binding (Lockton, p. 41). Collective agreements play regulatory role in forming and structuring employment contract between an employer and employee because they are made out from employees’ endeavor to influence the conditions of employment more effectively. Collective agreements are made out by employees in order to influence pay scale, job security, employee satisfaction at workplace, incentives and so forth. All these terms in the collective agreements will influence the contract of employment. The regulatory power of the collective agreement to employment contract is because of its legal binding and enforceable character. Collective agreements are not considered to be private law contracts, but rather, they play vital role as rule making for it governs employment relationship and thus create legally binding relationship. The collective agreements can influence the formation of contract because the regulatory power of collective agreements is the scope its application to the interested employees. More specifically, the terms of the collective agreements must be applicable to all classes of the employees who are covered by the agreement. Lewis and Sargeant described that it is generally easy to identify which terms of collective agreements are to be incorporated in to individual employment contract more appropriately. The substantive terms like those related to wages and hours are more appropriate than procedural ones (p. 13). Even though collective agreements are considered as legally binding in many countries, it is not the case in the Great Britain. Collective agreements are not legally binding and they are not themselves of any legal significance until they are translated in to the relationship between employee and employer. So it is the customary practice that the terms of the collective agreements will be incorporated in to employment contract. Conclusion The employment contract represents the fundamental relationship between employer and employee that contain significant terms and conditions of the employment between them. Both express and implied terms in an employment contract are binding and express terms have precedence over implied terms as is the case with normal contract. Collective agreements play significant role in the formation of employment contract between both the parties. This piece of research work has examined various implied terms in a contract of employment and outlined what roles they play with relation to the formation of a contract. References Bell A. C, Employment Law, Second and Revised Edition, Sweet & Maxwell, 2006 Carrigan F, The implications of implied terms in law in the common law contract of employment, Oxford University Commonwealth Law Journal, 2009 Chandler P and Waud C, Wauds employment law: the practical guide for human resource managers, trade union officials, employers, employees and lawyers, fourteenth edition, Kogan Page Publishers, 2003 Leighton P and Proctor G, Effective Recruitment: A Practical Guide to Staying Within the Law, Thorogood Publishing, 2006 Lockton D, Employment Law, Fourth revised edition, Routledge Cavendish, 2005 Macdonald L.A.C, Tolleys managing fixed-term and part-time workers: a practical guide to employing temporary and part-time staff, Second and Revised Edition, Butterworth-Heinemann, 2003 Oughton D.W and Davis M, Sourcebook on Contract Law, Revised Second Edition, Routledge, 2000 Suff and Bone A, Essential Employment Law, Revised second edition, Routledge, 1999 Read More