6. Incorporated terms

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This chapter looks at terms that have been incorporated into an employment contract from another source, including a collective agreement.

A term can be incorporated into the individual contract either expressly or by implication. Potential sources of incorporated terms include collective agreements, awards by external pay review bodies, staff handbooks and employers’ policies.

In the most straightforward cases, it is obvious which terms of a collective agreement or other document have been incorporated into the employment contract because the contract refers clearly and expressly to those terms. In other cases, it may be much less clear. A term will be incorporated if:

• it is “apt” for incorporation, meaning that it is the kind of term that is appropriate to be part of the contract; and

• it is expressly stated in the contract (for example, “your entitlement to sick pay is as set out in the staff handbook”); or

• it is implied in the same way as other terms are implied (for example, there is a clear practice of paying sick pay in accordance with the staff handbook and it is obvious to both parties that this is what was intended).

Even if a contract of employment refers expressly to another source, such as a collective agreement or staff handbook, it does not follow that all the terms contained in that source are legally binding. Each term may need to be examined to decide whether it is apt for incorporation.