All employees have a contract of employment. Where there is no document setting out the terms of the contract, the contract may be oral. Whether the contract is written or oral, the terms of an employment contract may be express or implied.

Express terms

Express terms are those terms that are explicitly agreed. They generally include all the terms set out in a written contract of employment. But they can also include terms set out in other documents, like policies, and they can be oral as well.

Where no written contract exists, it may be necessary to examine all of the surrounding circumstances to determine the agreed express terms. This may include reviewing telephone conversations and SMS records, facsimiles, and e-mails to determine what agreement was reached by the parties.

Implied terms

Written employment contracts often cover only the key elements of the employment relationship, such as position, wage rates, superannuation and work location. However, the law often ‘implies’ a range of other terms into the contract.

Terms may be implied by operation of the law, by custom and practice or by the facts surrounding the employment.

For example, employment contracts may contain an implied term requiring the employer to act in good faith and to cooperate. The scope and content of the duty is notoriously complex. However, it might prevent an employer, for example, from capriciously withholding a bonus or suspending an employee.

Finally, another common implied term arises when an employment contract does not expressly state how it can be terminated. In such cases, the law will imply a term that the employment contract can be terminated on ‘reasonable notice’.

Where the parties have reduced the employment contract to writing, there is less scope for terms to be implied. Broadly speaking, the more detailed the contract, the less willing the courts will be to imply additional terms.

Sometimes contracts contain ‘entire contract’ clauses. These clauses generally state that the written terms of the contract are the entire agreement between the parties. In some circumstances additional terms can be implied into these contracts, notwithstanding the ‘entire agreement’ clause.