The employment contract

The terms of a contract of employment may be oral, written, implied, or a mixture of all three.

Where to find terms of a contract of employment

The terms of a contract of employment can be found in a variety of places, such as:

• the original job advertisement
• written correspondence, eg letters, and emails, between you and the employee
• the principal statement
• the written statement of employment
• other written agreements
• oral agreements
• your company policies
• an employee/company handbook
• legislation and case law

Terms through custom and practice

Certain terms of employment may become established or implied in the contract of employment by custom and practice. They may, for example, be regularly adopted within a trade or industry in which the employee works. In the absence of any express or written terms of employment, this is often the only way that an employee can establish their entitlement to important contractual rights. For a term to be implied by custom and practice it must be:

• reasonable - fair and not arbitrary or capricious
• certain - clear to all and not capable of being interpreted in different ways by different people
• notorious - well known to all to whom it relates and should have been in existence for a considerably longer period of time

Terms that could be viewed as implied by custom and practice could include the provision of transport to work, rest breaks, finishing times, commissions, entitlements to overtime payments etc, where these terms are not clearly expressed elsewhere. An oral contract is as binding as a written one, though its terms may be more difficult to prove.

If you want to include provisions specific to the individual, you can state these either orally or in writing. However, stating them in writing may prevent disagreements in the future.

If you issue a written contract, it should reflect those terms and conditions that are currently in place on the date of issue, unless you have agreed on changes. If you have agreed to changes, you should include a term in the written contract stating that it replaces all previous discussions/correspondence in relation to terms of employment.

If you do not have any kind of written contract of employment with an employee, you must - at the very least - issue them with a written statement of employment.

If you have some kind of written contract of employment with an employee, you do not need to issue a written statement as well - provided that the contract contains all the items required in a written statement.

Read more on putting together an employee's written statement of employment.