# The contract of employment: express and implied terms

> **Key takeaway:** Express + incorporated + implied terms. s.1 ERA particulars. Mutual trust and confidence (Malik). Statutory floors override conflicting terms. Variation needs agreement or valid flexibility. Status: see employment-status note.

- **Jurisdiction:** England & Wales
- **Practice area:** Employment
- **Last reviewed:** 2026-08-04
- **Interactive page:** https://kttclegal.info/library/notes/Employment/contract-of-employment
- **Keywords:** contract of employment, mutual trust and confidence, Malik, written particulars, ERA 1996 s.1, implied terms, constructive dismissal, handbook

## What is this about?

The contract of employment is the foundation of the employment relationship. It comprises express terms (including the s.1 ERA written statement particulars), terms incorporated from handbooks/collective agreements, and important implied terms — notably mutual trust and confidence and the wage/work bargain.

## What is the core rule?

A contract of employment is a contract of service. Express terms bind if agreed; statutory minimum rights (NMW, working time, discrimination, unfair dismissal eligibility) cannot be validly contracted out of where statute so provides. Employers must give a written statement of particulars (ERA 1996 s.1 as expanded). Key implied terms include the employee's duty of faithful service and the employer's duty not, without reasonable and proper cause, to destroy mutual trust and confidence (Malik). Wrongful dismissal and some constructive dismissal claims turn on contractual breach analysis.

## What are the elements or test?

1. Identify parties and status (employee vs worker — see status note)
2. Map express terms, incorporated documents, and custom
3. s.1 statement compliance and any s.38 EA 2002 award issues
4. Implied terms engaged (trust and confidence; care; wages)?
5. Variation: agreed change, flexibility clause, or breach?
6. Remedies: damages, injunction rare, constructive dismissal pathway

## Which authorities matter?

- **Employment Rights Act 1996, s.1 (written particulars)** — Employer duty to provide statement of particulars of employment.
- **Mahmud v Bank of Credit and Commerce International SA (Malik) [1997] UKHL 23, [1998] AC 20** — House of Lords on the implied term of mutual trust and confidence.
- **Johnson v Unisys Ltd [2001] UKHL 13, [2003] 1 AC 518** — Limits on recovering stigma/psychiatric damages for manner of dismissal in contract — interaction with unfair dismissal statute.
- **Autoclenz Ltd v Belcher [2011] UKSC 41, [2011] ICR 1157** — Reality of agreement may prevail over written labels in employment status/terms analysis.

## How does this apply in practice?

Collective agreements may be incorporated expressly or by reference. Garden leave and PILON are express-term driven. Always separate contractual claims from statutory unfair dismissal. Handbooks bind only if incorporation is made out.

## What are common pitfalls?

- Assuming a staff handbook is wholly non-contractual without reading incorporation wording
- Varying terms unilaterally without a lawful flexibility mechanism
- Ignoring s.1 particulars failures
- Pleading pure trust-and-confidence damages barred by Johnson in dismissal-manner cases without statutory route

## When would a practitioner use this?

Contract drafting, variation disputes, constructive dismissal advice, and particulars compliance.

## Quick reference

Express + incorporated + implied terms. s.1 ERA particulars. Mutual trust and confidence (Malik). Statutory floors override conflicting terms. Variation needs agreement or valid flexibility. Status: see employment-status note.

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*Reference material from [KTTC Legal](https://kttclegal.info/), not legal advice. Work product supports instructing solicitors and barristers under their supervision. England & Wales.*