Implied terms

Many employment contract terms are not expressly stated and instead are left unsaid. These are known as implied terms. Where an employment contract is silent, there are three circumstances in which contract terms can be implied. These are:

• where a contract term is necessary in order to give business efficacy to the contract, in other words, to make it workable (Liverpool City Council v Irwin [1977] AC 239) (known as the “business efficacy test”);

• where a contract term is so obvious that both parties, if asked when entering into the contract whether they intended to be legally bound by it, would have responded “of course!” (known as the “officious bystander test”); and

• through custom or practice (see below).