Implied Terms in the Contract of Employment

In this article, I offer a critical analysis of the current state of the law on implied terms in the contract of employment, drawing inspiration from Sir Patrick Elias’s decided cases and academic writing on the topic. Implied terms provide an important opportunity to develop the protective function of the contract of employment to redress the inequality of bargaining power between employer and employee or, in the more modern terminology, the risk of unjustified domination of the employee by the employer. Implied terms can be deployed in both contractual claims (subject to the limitations put in place by Johnson and Edwards) and in unfair dismissal claims, where they are often central to determining whether a ‘constructive’ dismissal has taken place. Perhaps because of the variety of different circumstances in which implied terms might be used, the law has become somewhat muddled, and there have been some sharp disagreements among commentators as to how particular cases or lines of reasoning should be interpreted. I examine three lines of case-law in which employers’ decisions or actions are judged according to different tests: mutual trust and confidence, reasonableness and ‘proper purposes’. I explore how these three strands of case-law fit together, and conclude with some pointers for future development inspired by Sir Patrick’s contributions to the field.