HND in Law

Unit: Employment Law

Batch: 16
Semester: 01
Note: 02
FORMATION, VARIATIONS, & IMPLIED DUTIES
INTRODUCTION; FORMATION & VARIATION
There are no particular legal rules.
It requires;
Student Notes 1. Offer and acceptance, generally the offer comes from the employer and acceptance
from the employee, who may write a letter or simply turn up for work at an agreed
time.
An employment contract may be a document signed by both parties; Or else it would
be handshake and ’Come on Monday’; here it seems an oral contract.
 The Agreement contains the Terms and Condition of the Employment.
2. Consideration comprises the promises each party gives to the other – a promise to
work for a promise to pay.
3. The intention to create legal relations is imputed from the fact that essentially
employment is a commercial transaction.
4. Parties should have Capacity as well.

NOTE: A contract of service may be express or implied. If express, it can be either oral or
written. In essence, then, an employment contract can be a simple, straightforward
agreement. However, as we shall see later, some rights for employees are provided by
statute (Acts of Parliament). Employees and employers cannot ‘opt-out’ of these rights, even
if they expressly agree to do so.

Volunteer work
Is there a contract of Employment? Is there an intention to be legally bound?

In Uttley v St John Ambulance, Appeal Number: EAT/635/98 it was found that a ‘genuine’
volunteer of St John Ambulance had no legal remedy against the organization.
 In case if anything, then the actual expenses may be given.

Note: the distinction need to be made between legally binding relationship, the law will
readily imply the parties intention in commercial relationship.

NOTE: And Court will not enforce a contract, which is made for illegal purposes; to commit
crime, to fraud, to promote corruption & etc.

Contract of Employment (Letter of Appointment) Is Not Mandatory In

Sri Lanka
The Shop and Office Employee's Act
S.17 provides that "Every employer by whom any person is employed in or about the
business of any shop or office shall furnish such person on the date of his employment with
such particulars as may be prescribed relating to the conditions of his employment”.

Suppose in every instance if such letter is provided it would be easier but not at all always
conclusive; therefore as discussed in the previous lectures the relevant tests may be used to
identify.

NOTE: Apart from the Shop and Office Employee's Act, there is no other Statute, which
imposes an obligation on the employer to issue a letter of employment to employees.

Salmah Kaleel Page 1 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
Express Terms
• The terms agreed by the Parties. Could be in written form or oral.
• Usually found in the letter of appointment or in the written contract of employment.
• Some of the general express terms are usually: Pay Rate, Working Hours, Leaves & other
relevant Regulations.
Student Notes
It generally covers the statements/clauses made by the consent of both the parties or by one
party, which are agreeable to the other party. Then and there these clauses become part of
the contract.

These terms or clauses can be totally oral, totally written, partly oral and partly written.
In partly oral and partly written terms, the oral terms are representatives and written terms
are the actual agreeable clauses. In case of violation of these terms by any of the parties, the
other party can go to the court for judicial action. When a contract is made between two
parties, there can be express terms as well as implicit terms.

The express terms entails present state of affairs, future happenings, confidentiality terms
etc. For example, the express terms in a contractual agreement between an employer and
an employee can contain clauses about the salary, leaves, breach of confidential
information outside the company, retirement bonus and benefits, fringe benefits etc. The
terms are incorporated when signed by both the parties and person joins the job. The court
decides the repercussions on violations of these terms by either the employee or the
employer if the case is taken to the court. These terms are legally bounded. Oral terms are
terms, which can be formed by mutual agreement after discussion or said by one party and
agreed by the other party orally.

Good Example is, if BCAS wants to appoint staffs, during the interview, the negotiation takes
place (about the wages & etc.) This is an oral agreement, which cannot be violated. Since it
is very difficult to include each and everything, whichever is not mentioned will become
implied term (it is easy to understand such as how to behave how to perform a job etc.)

NOTE: THE STATEMENT IS NOT A CONTRACT UNLESS BOTH PARTIES AGREED.

In Deeley v British Rail Engineering ltd (1980)

Held that, the advertisement referred to a “sales engineer (export)”, the contract however,
referred to a sales engineer, and the written terms stated that he was to perform duties ‘ as
required’ by his employer.

It was held that he was a sales engineer and not an export sales engineer.
In simple words: it may also be possible to refer an advertisement in order to ascertain the
exact terms of a contract, such statement cannot override the express terms.

The courts also look at an advertisement and letter of appointment to spell out terms of the
contract or to decide terms agreed when there is an ambiguity – please read the case law in
Pedersen v Camden London Borough Council: CA 1981

NOTE: if the contract is clear-cut and comprehensive the parole evidence rule is applicable
no external reference (advertisement, etc.) are made. As discussed on applicable on
ambiguity. Sometimes even orally agreed terms during the process of appointment also may
be upheld as well.

Salmah Kaleel Page 2 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
Variation of Terms/ Contract
A contract of employment is a legally binding agreement and any changes must be agreed
by both parties. However, changes can be agreed even possible through collective
agreements as well. (Please refer the Upcoming Slides) Changes to contracts can be agreed
verbally or in writing but, to prevent any misunderstanding, it is preferable for any changes
Student Notes to be recorded in writing.

In GAP Personnel Franchises Ltd -v- Robinson UKEAT/0342/07 The EAT found that an
employee had acquiesced in an otherwise illegal variation of his contract in relation to
mileage expenses as he had continued to submit claims at the new lower rate for 5 months
without protest.

In simple words; there had been a practice of mileage allowance, but it was reduced, without
protesting or demanding employee worked- it is an implied consent.

But Grix v Munford Ltd (Unreported Case) it is an exemption.

Case Law Principle: Employee has the duty to adapt on the efficiency…therefore the dismissal
was fair.

Example: typewriter situation to computer.

However: proper consultancy, Due consideration should be provided, Alternative
suggestions, EMPLOYER SHALL PROVE THAT THE CHANGE IS NECESSARY.

Variation by Statute
Due to the unequal bargaining power between workers and employers, successive
governments have found it necessary to incorporate into the employment contract certain
terms. In simple words: clauses that exclude an employee’s various statutory rights are void,
though there are special rules when claims are settled.

NOTE: here parties consent is required, the moment when statute is enacted that will
override the terms.
Sri Lankan statutes in relation to such terms will be discussed later at another session.
Labour statute plays a role to protect the workman/

Variations by Collective Agreements; in Sri Lanka

It is a special type of commercial agreement, usually as one negotiated "collectively"
between management (on behalf of the company) and trade unions (on behalf of
employees).

It regulates the terms and conditions of employees in their workplace, their duties and the
duties of the employer. It is usually the result of a process of collective bargaining between
an employer (or a number of employers) and a trade union representing workers.

Some Case Laws & its Effect on varying the Terms of Employment Contract
As we studied earlier, a term of the employment contract can be varied by consent of the
parties (except for certain statutory minimum terms).

In Rigby v Ferodo Ltd [1987] IRLR 516; [1988] ICR 29, HL. If the employer tries to vary a term
of the employment contract but does not get the employee’s consent, that variation is not
recognized as lawful.

Salmah Kaleel Page 3 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
Suppose. If employee continues working without protesting against the variation or change
then it is consent. Or else even protest at the initial stage at the change is also sufficient, no
need a continual protest.

In simple words: Many of the options (by varying) may lead to the employee’s dismissal.
Whether or not an employee will succeed in an unfair dismissal case depends on eligibility to
Student Notes
claim and the normal principles of fairness.

Implied Terms
In the absence of express terms, employment contracts need terms to be implied into them
in order to make them workable, meaningful and complete.
These terms you may not find in the contract document but it’s all obvious.

Examples of some implied terms;

a. Be honest in any dealings and be loyal to the employer
b. The employer must provide a safe and secure environment for the employee
c. An employer should trust the employee and vice versa
d. Any term that needs no explanation – e.g. stealing from the employer will result
in termination of the employment and attract legal action
e. Any terms that are necessary to fulfill the terms of a contract – e.g. a driver needs
to hold a valid driving license

Eg: BCAS as an educational institute, every year end vacation, from the day of establishment,
gives some gifts & bonuses to their staff. Due to the economic crisis if BCAS reduced it and
decided to give less than how it used to give will be taken into the consideration. It as a BCAS
custom and practice also became an implied term.

As per the case Lister v Romford Ice and Cold Storage Co Ltd [1957] 1 All ER 125, HL.
Implied terms of fact are used to fill a gap where there is no express term on a particular
point. The courts will imply a term only if it is absolutely necessary to do so, or if it is clear
that the employer and employee would have agreed to the term if it had been discussed.

But in Aparau v Iceland Frozen Foods plc [1996] IRLR 119, EAT. The courts will not intervene
and imply a term just because it is reasonable or convenient the idea is to give effect to the
parties’ presumed intentions.

References & Further Readings

1. Chapter 38 A TEXT BOOK OF COMMERCIAL LAW (BUSINESS LAW) (2010) BY Dr. Wickrema
Weerasooriya.
2. labour law and relations (2009) by Arosha s. adikaram- you may use the latest edition.
3. labour law block 1;open university book.
4. Terms and conditions of employment Available at:
http://www.lag.org.uk/media/40098/employment_law_sample_chapter.pdf.
5. VARIATION OF CONTRACT Available at http://www.elgni.co.uk/wp-
content/uploads/2015/11/VARIATION-OF-CONTRACT-2015-UPDATE.pdf

Salmah Kaleel Page 4 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
INTRODUCTION; IMPLIED DUTIES/TERMS
The employer has an implied duty at common law to take reasonable care of his employees;
he must select proper staff, materials and provide a safe system of working.
• The employee has a duty of faithful service and to exercise care and skill in
performance of his duties.
Student Notes • Employee's duties – the employee has a fundamental duty of faithful service to
his employer.
All other duties are features of this general duty and serious breaches may justify the
employer dismissing them.

Common Law Implied Terms & Duties by the Employee

1. Mutual trust and confidence
As per the case Woods v WM Car Services (Peterborough) [1982] ICR 69, CA it is very
important implied terms. An employer must not, without reasonable and proper cause,
conduct the employee in a manner likely to destroy or seriously damage the relationship
of trust and confidence with the employee.
 This is applicable to both parties.

Some issues related to such term by an employer:

 As per the case law; Western Excavating (ECC) v Sharp [1978] ICR 221; [1978] IRLR 27,
CA. Physical or verbal abuse was recognized.
 Sexual harassement; as per the case law; Western Excavating (ECC) v Sharp [1978] ICR
221; [1978] IRLR 27, CA. and the failure to support someone who has been the victim
of harassment at work; Wigan BC v Davies [1979] ICR 411, EAT.
 Imposing a disciplinary penalty when unwarranted or where the disciplinary procedure
is not followed; as per Post Office v Strange [1980] IRLR 515, EAT.

Breach of the implied term of trust and confidence may cause an employee to resign and
claim constructive dismissal.

2. Not to act arbitrarily, capriciously or inequitably

There is an implied term that an employer will not treat an employee arbitrarily,
capriciously or inequitably without good reason.
 FC Gardiner Ltd v Beresford [1978] IRLR 6, EAT – failing to give an employee a pay increase
without good cause when other employees are given an increase has been held to be a
breach of this term

3. Good Faith and Fidelity

 Faccenda Chicken Ltd v Fowler [1986] IRLR 69, CA – this implied term lasts during
employment but not after its termination.
 Boston Deep Sea Fishing and Ice Co v Ansell (1888) 9 Ch D 9, CA Any action by an
employee which seriously harms the employer’s business will be in breach of this term.

Likewise, an employer who discloses to third party information about an employee without
good reason or consent will be in breach of this term. Examples are:
• as per Faccenda Chicken Ltd v Fowler [1986] IRLR 69, CA carrying on business in
competition with the employer the use of the employer’s list of customers including
his/her business requirements.
• Employees cannot use confidential information for their own personal benefit during
their employment. The employee may also have agreed express contract terms, eg:
not to set up in competition after leaving the employment or not to poach staff or
Salmah Kaleel Page 5 of 14
 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
customers for a specified period of time. These are known as ‘restrictive covenants’.
If they are too restrictive in their ambit, they may not be enforceable, because it can
be against the public interest to restrain trade more than is reasonably required to
protect legitimate business interests. This is a complex area of law.

Some Other Examples

Student Notes
Employee has a duty of good faith to their employer. This includes;
 Accounting for all money and property received during employment, except what it is
customary to be received or if it is trivial
 In Boston Deep Sea Fishing and Ice Co v Ansell
The facts: The defendant, who was the managing director of the claimant company,
accepted personal commissions from suppliers on orders which he placed with them
for goods supplied to the company. He was dismissed and the company sued to
recover from him the commissions.
Decision: The Company was justified in dismissing the claimant and he must account
to it for the commissions.

 Protecting confidential information

 In Fowler v Faccenda Chicken Ltd 1986, the Court of Appeal considered what
information should be considered confidential. It decided there are three categories;
i. Not confidential due to its trivial nature or easy accessibility.
ii. Information, which is confidential, but becomes part of the employee's skill
and knowledge.
iii. Specific trade secrets. Once an employee leaves employment, they only
have a duty to protect the last category.

 The same duty of fidelity to an employer to whom he is seconded as to a contractual

employer.
 Hivac Ltd v Park Royal Scientific Instruments Ltd 1946
The facts: In their spare time certain of the claimant's employees worked for the
defendant company, which directly competed with the claimant.
Decision: Even though the employees had not passed on any confidential information,
they were still in breach of their duty of fidelity to the claimants.

The importance of these common law implied duties on both parties is that:
• Breach of a legal duty, if it is important enough, may entitle the injured party to treat
the contract as discharged and to claim damages for breach of contract at common
law, and
• In an employee's claim for compensation for unfair dismissal, the employee may argue
that it was a case of constructive dismissal by the employer, or the employer may seek
to justify his express dismissal of the employee by reference to his conduct.

Restraint of trade some employment contracts seek to restrict the activities of employees
after they leave service through the use of restrictive covenants.
In Countryside Assured Financial Services v Pollard 2004, such covenants were held to be
void. They will be enforced only to the extent that they do the minimum to protect the
interests of the employer.

4. Not to Disclose trade secrets/Confidentiality

As per Faccenda Chicken Ltd v Fowler [1986] IRLR 69, CA It is implied that the employee
cannot disclose, either during employment or after it has ended, the employer’s trade
secrets or highly confidential information

Salmah Kaleel Page 6 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
• Most employees will not have access to information which would amount to a trade
secret. The true nature of a trade secret is something which the outside world does
not or could not ascertain, such as a process or a chemical formula, Example: the
ingredients of Coca Cola, and not just lower level confidential information which the
employer does not want the employee to use after s/he leaves.
Student Notes
5. To obey reasonable and lawful orders
The employee is obliged to obey reasonable and lawful orders. Lawful means both a
requirement of parliament as well as an order given within the ambit of the employment
contract.
 If the employee is asked to perform a function outside the employment contract which
is unreasonable, s/he can, in theory, refuse. The employee needs to be careful because
a small degree of flexibility is often taken to be within the contract. Also, if the
employee is dismissed for failing to follow a reasonable but non-contractual order, it
is still possible that the dismissal will be fair.

Obedience to the employer's instructions unless they require him to do unlawful, dangerous
or unreasonable acts: Morrish v Henlys (Folkstone) Ltd 1973.

Reasonable competence to do their job.

• Reasonable care and skill in the performance of his work: Lister v Romford Ice and Cold
Storage Co1957. What is reasonable depends on the degree of skill and experience
which the employee professes to have.
• Personal service – the contract of employment is a personal one and so the employee
may not delegate his duties without the employer's express or implied consent.

6. Care of Employer’s Equipment

The employee owes the employer a duty to look after the employer’s equipment and
machinery. The failure to exercise due care, leading to loss to the employer, could
constitute a disciplinary matter. This will arise if the employee has injured a third party,
as any claim by the latter will usually be against the employer.

7. To Employ a Competent Workforce

The employer owes a duty to employ a competent and safe work force Hudson v Ridge
Manufacturing Co [1957] 2 All ER 229, QBD. , safe plant and equipment, to have a safety
system at work and to pay attention to employees’ complaints in relation to safety
matters British Aircraft Corporation v Austin [1978] IRLR 332, EAT.

8. To provide a safe working environment

The employer owes a contractual duty to provide a safe working environment. (There are
also detailed statutory rules about health and safety at work.)

9. To deal promptly with grievances

W A Goold (Pearmak) Ltd v McConnell [1995] IRLR 516, EAT The employer is under a duty
to give employees an opportunity to have their grievances heard reasonably and promptly

Common Law Implied Terms & Duties by the Employer

A. Duty to pay wages
This is perhaps the most important of an employer's implied duties. As an employer, you
have an implied duty to pay all your employees for the work they have completed.

Salmah Kaleel Page 7 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
If an employment contract provides sick pay, but does not specify the length of time that
it will be paid for, then a court or tribunal may decide for how long it shall be payable. The
general presumption is that an employer will only pay sick pay for a reasonable amount
of time. What is a reasonable amount of time is determined by the industry that the
employee works in and any other circumstance that a court or tribunal finds to be
relevant.
Student Notes
To indemnify the employee against expenses and losses incurred in the course of
employment.

 In Miles v Wakefield Metropolitan District Council [1987] IRLR 193, HL

Employees’ rights to remuneration depend on their being willing to do the work they are
employed to do.
The Facts: Mr Miles was a superintendent registrar of births, deaths and marriages. He
normally worked for three hours on a Saturday morning. Between August 1981 and
October 1982, on the instructions of his union, he refused to carry out marriages on
Saturday mornings. The employer stated that if he did not carry out marriages on
Saturday mornings, he would not be paid. Mr Miles performed other work on Saturday
mornings and the employer withheld a proportion of his pay, effectively not paying him
for Saturday mornings. His action for damages for the lost wages was dismissed at first
instance but allowed by the Court of Appeal. The employer appealed to the House of
Lords.

Decision HL: Although Mr Miles was the holder of an office, and not a servant under a
contract of employment, his position was similar to that of an employee and if he declined
to do the work for which he was employed, the employer need not pay him.
An employee is only entitled to payment of wages if he or she performs the work that he
or she is contractually obliged to do. In most circumstances, if he or she fails to carry out
the work, his or her employer is justified in refusing to pay wages. (Note, however, that
an employee may be justified in refusing to work if the employer has breached, for
example, health and safety obligations.)

B. Duty to provide work

The question of whether there is a right for an employee to be provided with work
depends of the terms of the contract of employment and the particular facts and
circumstances. The duty to provide work can exist where:
 an employee has skills which require work to be provided to maintain those skills
 the employee holds a senior position
 an employee’s bonus or other benefit are determined by appraising how well they
have performed their duties, which requires them to be provided with work
 Equally, if your employee is paid by commission, or is a piece worker, there is an
implied duty to provide them with work. In these circumstances an employer
should not withhold work, if it is available. This duty also applies to skilled workers,
who may need work to maintain their level of skill through work.

At common law there is no duty to provide work, as demonstrated in Collier v Sunday

Referee Publishing Co ([1940] 2 KB 647): The plaintiff collier was employed as a chief sub-
editor with the defendant newspaper. Defendant sold the newspaper and continued to pay
the Plaintiff (Collier) although he was not provided works. Collier sought the right to work
and be paid for working.

Salmah Kaleel Page 8 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
It was Held: The employee had the right to work since or employer has the duty to provide
work in such an instance. Because P had been appointed a specific job, it has been now
destroyed on the sale of such newspaper, thereby denying him his right to maintain his skills.

Asquith J - “It is true that a contract of employment does not necessarily, or perhaps normally
oblige a master to provide the servant with work. Provided that I pay my cook her wages
Student Notes
regularly, she cannot complain if I choose to take any or all of my meals out.”
There are some exceptions to this general rule, including:
 Contracts involving a reputation that needs to be maintained through working (ie an
actor)
 Contracts based on piecework or commission, for to withhold work would be to
withhold the employee’s livelihood
 Contracts in which the employee enjoys certain privileges whilst carrying out their
work, which they would not otherwise have access to if the work was withheld (this
was the situation in Collier a case involving a newspaper editor)
 Contracts where continuing to perform work is necessary to maintain skills

C. Duty to Exercise Reasonable Care

Duty to take care of employee's health and safety
Employers must take reasonable care of their employees' health and safety.
There are many specific acts and regulations, which cover working conditions and safety
at work. Failure of an employer to act in accordance with the relevant legislation may in
certain circumstances lead to criminal proceedings and fines.

 Wilsons and Clyde Coal Ltd v English [1937] UKHL 2;

The employer's duty to provide a safe system of work for all its employees. As
summarized; The House of Lords held that the employer must provide:
 Proper and safe plant and equipment
 Safe systems of work, with adequate supervision and instruction
 Safe premises, including safe access and egress
 Safe and competent employees.
 This is supported by Lord McLaren in Bett v Dalmey Oil Co (1905), when he judged
that the obligation placed on employers is threefold: the provision of competent
staff, adequate material and a proper system, and effective supervision. These
duties were later enshrined in Section 2 of the Health and Safety at Work Act 1974
in UK.

 In Smith vs Scott Bowyers Ltd (1986)

Employee slipped on some kind of slippery or greasy floor; since the nature was very well
known to the employer, safety boot/shoes had been provided. Here the employee who
did not wear it. Here employee didn't take reasonable care.

 Also in Dryden v Greater Glasgow Health Board 1992.

There is no implied contractual term allowing an employee to smoke at work

D. Duty to Provide Grievance Procedure

There is an implied term in all contracts of employment that employees' grievances will
be dealt with promptly and properly.
 Grievances are concerns, problems or complaints that employees raise with their
employers.

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 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
Initially Employee try to sort it out with the relevant managers without going beyond
them, it happens in day to day activities. (It’s a very informal method). If failure then it
would go to formal method, without delaying (normally with the higher officer)

For a reasonable action the below mentioned elements are much more necessary;
Employers and employees; should raise and deal with issues promptly and should not
Student Notes
unreasonably delay meetings, decisions or confirmation of those decisions and both parties
should act consistently
Employers;
 should conduct necessary investigation and so to see or to establish facts
 should here the employee in relation to such matter. ( both parties should be heard)
 should allow employees to take part in any meeting in relation to such and in further
if available they should be given an opportunity to appeal as well

Notice for Termination

Where an employee's contract specifies a period of notice, on failure employer has acted in
breach of contract.
If such period is not mentioned then there is an implied term that reasonable notice will be
given.

E. Duty of Reference
 In Cox v Sun Alliance Life 2001.
There is no duty to provide a reference when employees leave service. Employers may be
liable under negligence for not taking reasonable care over accuracy and fairness if they
do provide one

 In TSB Bank v Harris [2000] IRLR 157, the bank breached the implied term of mutual trust
and confidence by giving a reference to a prospective employer which mentioned
complaints against Harris of which she was unaware, and which she had been given no
opportunity to answer. This was despite the fact the bank was required to make such
disclosures under the rules governing the regulation of the financial services industry.
The EAT pointed out the bank could have discussed the complaints with Harris, giving her
a chance to put her case, before making the disclosures.

F. Duty of Mutual Trust and Confidence. (Also Refer in the Employee`s Duties as
well)
Employers must not, without reasonable and proper cause conduct themselves in a way
that is likely to destroy or damage the relationship of mutual trust and confidence that
exists between an employer and an employee. Examples of such behavior are:
 physical and verbal abuse
 sexual harassment and the failure to support someone who is the victim of sexual
harassment at work
 moving a senior employee into an inadequate office or location
 imposing an unwarranted disciplinary sanction or failing to follow a disciplinary
procedure
 An employer’s behavior must be very serious in order to breach the implied term of
mutual trust and confidence. If an employer is found to have done so and the
employee suffers financial loss then they will be responsible for compensation.

 Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84

Salmah Kaleel Page 10 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
During the course of a heated argument, a manager told an employee: "You can’t do the
bloody job anyway." He responded by resigning and claiming constructive dismissal.
Accepting that there was no truth in the manager’s comment, the EAT held the employee
was justified in claiming constructive dismissal.

It said there was an implied term in employment contracts that employers would not,
Student Notes
without reasonable and proper cause, conduct themselves in a manner calculated or likely
to destroy or seriously damage the relationship of confidence and trust between the parties.

 Gardner v Beresford the Employment Tribunal held that it was arbitrary to refusal to give
a pay rise to one employee when every other employee received one. Equally, it was held
in the case of the Post Office v Roberts that a breach of the implied duty of mutual trust
and confidence could exist where a senior officer described an employee as wholly
unsuitable for a promotion.

 Malik v the Bank of Credit and Commerce International SA (in liquidation).

In this particular case the Bank of Credit and Commerce International collapsed due to
fraudulent and corrupt dealings in the past. Subsequently, the employees of the Bank
attempted to sue for breach of contract amounting from the breach of mutual trust and
confidence, and argued that their reputations were tainted due to their association with
the fallen Bank.
The House of Lords stated that the duty should be followed in these terms, ‘……the
employer shall not, without reasonable and proper cause, conduct itself in a manner
calculated or likely to destroy or seriously damage the relationship of confidence and trust
between employer and employee'.
It is finally worth noting that these cases all demonstrate the fundamental requirement
that an employer, as-well-as an employee, must not act in a way which destroys the
implied duty of mutual trust and confidence. This was the ruling from the case of Woods
v WM Car Services (Peterborough) Ltd.

 In BG plc v O'Brien [2001] IRLR 496 EAT the EAT holds that an employer was in breach of
contract when it denied an employee the benefit of a contractual redundancy package
because it had not appreciated that his employment status was that of a "permanent"
employee.
Moreover, the fact that the employee was the only one out of 75 employees not to
receive this benefit amounted to conduct capable of being an act calculated seriously to
damage or destroy the trust and confidence between the employer and that one
employee. An employment tribunal had not erred in its holding that the employer was in
breach of its implied duty of trust and confidence and in particular, in its duty to treat
employees in a fair and even-handed manner.

Importance of These Implied Duties

The importance of these common law implied duties on both parties is that:
 Breach of a legal duty, if it is important enough, may entitle the injured party to treat
the contract as discharged and to claim damages for breach of contract at common law;
and
 In an employee's claim for compensation for unfair dismissal, the employee may argue
that it was a case of constructive dismissal by the employer, or the employer may seek
to justify his express dismissal of the employee by reference to his conduct.

Salmah Kaleel Page 11 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
Another important aspect in employment law is vicarious liability: (you would learn this in
detail in law of tort)

Employer’s Liability for the Employee’s Act during the Course of

Employment
Student Notes Vicarious liability means liability for the torts of others and arises because of a relationship
between the parties.
Possible Situations – There shall be a contract of employment and their relationship shall be
considered.

Relationship of employer and employee: please refer the Test (i.e. Employee or
Independent Contractor)

Torts must have been committed during the course of employment

Then Employer is Vicariously for the Employee`s torts.
And also if:

A. If the employee disobeys orders as to how he shall do his work

 Limpus v London General Omnibus Co 1862
The facts: The driver of an omnibus intentionally drove across in front of another omnibus
and caused it to overturn. The bus company resisted liability on the ground that it had
forbidden its drivers to obstruct other buses.
Decision: The driver was nonetheless acting in the course of his employment, so the
employers were liable.

 Beard v London General Omnibus Co 1900

The facts: The same employer forbade bus conductors to drive buses. A bus conductor
caused an accident while reversing a bus.
Decision: He was not doing the job for which he was employed and so the employers were
not liable.

B. While engaged on his duties during the course of employment, the employee does
something for his own convenience.
 Century Insurance v Northern Ireland Road Transport Board 1942
The facts: A driver of a petrol tanker lorry was discharging petrol at a garage. While
waiting he lit a cigarette and threw away the lighted match. There was an explosion.
Decision: The employer was liable since the driver was, at the time of his negligent act, in
the course of his employment.
If the employer allows the employee private use of the employer's vehicle, the employer
is not liable for any accident which may occur. There is the same result when a driver
disobeys orders by giving a lift to a passenger who is then injured.

 Twine v Bean's Express 1946

The facts: In this case there was a notice in the driver's part of the van that the firm's
drivers were forbidden to give lifts. The passenger was killed in an accident.
Decision: The passenger was a trespasser and in offering a lift the driver was not acting in
the course of his employment.

 Rose v Plenty 1976

The facts: The driver of a milk float disobeyed orders by taking a 13 year old boy round
with him to help with his deliveries. The boy was injured by the driver's negligence.

Salmah Kaleel Page 12 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
Decision: The driver was acting in the course of his employment (presumably because the
boy was not a mere passenger but was assisting in delivering milk).

If the employee, acting in the course of his employment, defrauds a third party for his own
advantage, the employer is still vicariously liable.
Student Notes
C. The employee commits a criminal act that is sufficiently connected to their work.
 Lister v Hesley Hall Ltd 2001
The facts: Three former pupils claimed they were sexually abused by the warden at their
school. The claim was based on the school's actual or constructive knowledge that abuse
was taking place or that they were negligent in preventing it.
Decision: The House of Lords held there was sufficient connection between the work the
warden was employed to do and the abuse he committed. Accordingly, the school was
liable.
This contrasts with ST v North Yorkshire County Council 1999 where a school was not held
liable for abuse committed by a deputy head teacher whilst on a school holiday. The court
said it was an independent act.

 Fennelley v Connex South Eastern 2001

The facts: A ticket inspector assaulted a train passenger following an argument.
Decision: The employer was held liable since the company should have suitable training
in place to help its employees to deal with difficult situations.
Contrast this with the following case.

 Warren v Henleys 1948

The facts: A petrol pump attendant became involved in a quarrel with a customer and hit
him.
Decision: The employer was not liable since the assault was not within the scope of the
employment. It is not easy to distinguish this from the Century Insurance case above, but
perhaps the main difference in the Warren case is that it was a violent personal act
entirely unconnected with the employee's duty to sell petrol.
Where the employer is held to be vicariously liable, he may seek indemnity for the costs
from his employee: Lister v Romford Ice and Cold Storage Co 1957.

Independent contractors (on Special Circumstances)

A person who has work done not by his employee but by an independent contractor, such as
a freelance plumber used by a builder, is vicariously liable for torts of the contractor in the
following special circumstances.
a. If the operation creates a hazard for users of the highway.
b. If the operation is exceptionally risky.

 Honeywill & Stein v Larkin Bros 1934

The facts: Decorators who had redecorated the interior of a cinema brought in a
photographer to take pictures of their work. The photographer's magnesium flare set fire
to the cinema.
Decision: In commissioning an inherently risky operation through a contractor the
decorators were liable for his negligence in causing the fire.

D. If the duty is personal. For example, an employer has a common law duty to take
reasonable care in providing safe plant and a safe working system. If they employ
a contractor they remain liable for any negligence of the latter in their work.

Salmah Kaleel Page 13 of 14

 HND in Law
Unit: Employment Law
Batch: 16
Semester: 01
Note: 02
E. If there is negligence in selecting a contractor who is not competent to do the
work entrusted to them.
F. If the operation is one for which there is strict liability.

References & Further Readings

Student Notes  Chapter 38 A TEXT BOOK OF COMMERCIAL LAW (BUSINESS LAW) (2010) BY Dr.
Wickrema Weerasooriya.
 labour law and relations (2009) by Arosha s. adikaram- you may use the latest
edition.
 labour law block 1;open university book.
 Terms and conditions of employment Available at:
http://www.lag.org.uk/media/40098/employment_law_sample_chapter.pdf.
 Sexual-Harassment-at-Sri-Lankan-Workplaces-and-its-Legal-Remedy.pdf available
at: http://www.wercsl.org/wp-content/uploads/2016/03/Sexual-Harassment-at-
Sri-Lankan-Workplaces-and-its-Legal-Remedy.pdf
 Sexual harassment in workplace, a serious issue – Senior Law Lecturer Available at
: http://archives.sundayobserver.lk/2012/06/10/fea03.asp

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