Implied terms by fact and by law: What HR needs to know

When a contract is silent on an issue, the law can step in to fill the gap. This happens in two main ways. Some terms are implied based on what the parties must have intended, and others are imposed automatically by law.

Understanding the difference helps HR teams know what can be managed and what cannot.

First, there are terms implied by fact. These are unwritten provisions that tribunals read into a contract because they are necessary or obvious. The key point is that they are not added just because they seem fair. They must be essential to making the contract work.

For example, if someone is hired into a role that clearly involves driving, it is likely to be implied that they must hold a valid driving licence, even if the contract does not say so. In the same way, certain basic expectations about how a role is carried out may be implied if they are fundamental to the job.

Second, there are terms implied by law. These apply to every employment relationship, whether you include them in the contract or not. You cannot opt out of them.

The most important of these is the duty of mutual trust and confidence. This means both employer and employee must not behave in a way that seriously damages the working relationship without good reason. Other examples include the employee’s duty to act in the employer’s best interests, and the employer’s obligation to provide a safe working environment and comply with minimum legal standards such as pay and working time rules.

What HR should take away:

• Some gaps in contracts will be filled, but only where necessary.
• Legal duties apply in every case, even if they are not written down.
• You cannot rely on the contract alone to define the relationship.

A practical example:
Even if a contract gives wide discretion, using it in an unreasonable or heavy-handed way could still breach the duty of trust and confidence.

In short, not everything needs to be written down to be enforceable. Knowing which rules are implied helps avoid surprises and reduces the risk of disputes.

About Jon Dunkley

Jon Dunkley is a Partner at Wollens and heads up the firm’s Regulatory Department. Based at our North Devon office, Jon is a highly experienced solicitor with a broad commercial and regulatory practice, supporting businesses, professionals and senior employees across a wide range of legal issues.

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Jon is a Partner at Wollens and can advise you. Contact Jon via email jon.dunkley@wollens.co.uk or call 01271 341021.

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