Introduction

An incorporated term is a contract term deriving from another source that is incorporated into the individual contract of employment by agreement between the employee and the employer, either expressly or by implication.

Collective agreements, awards by external pay review bodies, the contents of staff handbooks and employer policies are all potential sources of contract terms that can be incorporated by reference into the employment contract.

In the UK, collective agreements are not legally binding as between the parties to that agreement — the union and the employer (section 179 TULRCA 92). Instead they are binding “in honour” and backed up voluntarily by good employment relations and the implicit threat of collective industrial action. Only collective terms that have been incorporated into the individual employment contract are legally binding.