Forming Contracts - Contract of Employment

To avoid later dispute and misunderstanding all job offers should be made in writing. If a particular matter is not referred to in writing and there is subsequently a dispute about it then judges with look for an unwritten term which they will derive either from past behaviour or what they think is reasonable. Either way it is far more preferable that the main issues have been set down in writing. They must contain all the key terms of the contract in a clear and understandable manner, either in the body of the offer letter or by reference to other documentation, to enable the individual to make an informed decision regarding acceptance. Most job offers are made on a conditional basis (e.g. on receipt of satisfactory medical and references).

Acceptance

Acceptance must be unconditional. An offer accepted with conditions is a counter-offer with the original offer having been rejected. The acceptance must be within a reasonable time period. In cases where the applicant may have more than one offer, it is good practice to include a time limit for acceptance. The individual should be notified where an offer has been withdrawn due to failure to respond.

.Acceptance does not have to be in writing but this is preferable to avoid misunderstandings.

Consideration

The promise by the employer to offer paid work and the employees promise to fulfil the assigned duties.

If no contract of employment exists beforehand, one will come into existence as soon as an employee starts work and, by doing so, demonstrates that he or she accepts the job on the terms offered by the employer. The contract need not be in writing, unless it is a contract of apprenticeship (employers should note however that a contract of apprenticeship may be found by the courts to be implied even if it is not in writing). Its terms can be written, oral, implied or a mixture of all three.

It is also important to appreciate that the contract can be modified at any time, again that modification does not have to be in writing. If for example the employer allows an employee to start work later for a particular reason and then this practice continues without qualification the contracted employment hours will have been modified, despite a written contract to the contrary. See varying the contract section for more information.

Implied terms might include those that are too obvious to be expressly agreed - for example, a term that the employee must accept reasonable instructions from the employer - those that are necessary to make the contract workable and those that are established by custom and practice in the particular organisation or industry concerned.

Contracts of Employment are formed and changed by a variety of measures:

The Offer Letter

This is an important document and forms the fundamental terms of the contract of employment. The letter should then set out the post that is offered, remuneration, benefits and the main terms of appointment (holidays, pension, hours of work etc).

Advertisements

The advertisement may be relied upon as evidence of a contractual term if details provided in the advertisement are not altered by later evidence. Those that respond to advertisements are commonly provided with further information which may include a job description, employers should be aware that job description may be relied upon in the future if there is a dispute. If the employer actually requires the employee to be flexible in their duties the job description should be qualified to that effect.

Interviews

Any statements made during the interview can be relied upon by an employee unless qualified at a later time. It is then important to keep a written record of the interview process, particularly recording anything that might be construed as forming a commitment to the future employment.

The Written Contract

Most written contracts begin by stating that they override any former letters or other commitments. But even this can be insufficient if written or verbal commitments are made at some stage in the recruitment process and the written contract does not address those issues. Hence the need for a comprehensive written contract.

Implied Terms

Where no evidence exists of express terms then courts will imply terms.

Verbal Agreements/ Custom and Practice

The contract can be modified at any stage either by a verbal agreement or by custom and practice. Employers should bear in mind Employment Tribunals will often give the employee the benefit of any doubt, hence if there is a verbal agreement (e.g. working hours, promotion, bonus payments) it is important to record it. Similarly if the employer permits the employee to change their working practice evidence that such a change has been condoned is sufficient to change the contract.