CLASS GUIDANCE NOTES

FORMATION OF THE CONTRACT OF EMPLOYMENT

The Employment Act allows the contract of employment to be agreed without written
formalities.

Section 2 of the Employment Act provides that a contract of service can be oral or in writing.

However, the law requires the employer to notify the employees of certain terms and conditions
of employment in a written form under section 59 and 60 of the Employment Act.

Therefore, a contract of employment does not need to be in writing to be valid, nor does it have
to be evidenced to have legal effect. This rule of common law is now embedded in Section 2 of
the Employment Act. Under Section 2 of the Employment Act, the contract of an employee, the
contract of service or the contract of employment may be express or implied. Where it is express,
it may be oral or in writing. To say that the contract of employment may be implied is to
recognize that it may be formed by conduct.

The written particulars, provided for under sections 59 and 60, requires the terms and conditions
to be formalised, but not the contract itself. Therefore the result of breach of the terms and
conditions is not to invalidate the contract, which would be the case if writing was a condition of
formation of a contract of employment. Rather the effect is to render the employer‟s view of the
contract as set out in the statement unenforceable in the circumstances where court concludes
that the contract terms are not as set out in the written particulars. Since the employer is in
position to dictate or impose terms to the employee, section 59 and 60 of the Employment Act
operate to protect the employee against the employers‟ superior bargaining power in defining the
content of the contract of employment. Thus the written particulars are not about the obligation
to inform, but also serve to protect the employee.

The written particulars include basic information inherent in all contracts of employment and
information agreed between the employee and employer.

TERMS IN THE CONTRACT OF EMPLOYMENT

Terms of contract of employment may be divided into three:

i) Terms expressly agreed by the parties either orally or in writing

ii) Terms implied into the contract by judges.
iii) Terms inserted into contract of employment by legislation (terms implied by statute)

TERMS IMPLIED BY COMMON LAW

Implied terms are unspoken intentions of the parties that fill in the gaps left by the agreed upon
express terms. Therefore, these terms are inserted into the contract of employment to give it
business efficacy and to interpret the express terms or as default rules.

For business efficacy, read the case of Jones v Associated Tunnelling Co Ltd [1981] IRLR 477
where court devised an implied term to allow the employer some necessary flexibility to relocate
employees in order to comply with the needs of „business efficacy‟, but the implied term also
placed a limit on the employer‟s discretion in order to prevent unreasonable hardship for the
employee..

The terms may be based on a custom in the trade that is notorious and reasonable. They may be
based on fact where judges insert the implied term to fill in the gaps in the self-regulation
provided by the express terms of the contract. They may be implied by law as default rules that
serve as a regulatory framework that normally applies to and shapes an employment relationship
unless the express terms provide something to the contrary.

The list of terms implied by law is extensive. Lord Turker, in the case of Lister v Romford Ice
and Cold Storage Co Ltd [1957] AC 555, 594, observed:

Without attempting an exhaustive enumeration of the duties imposed in this way upon a
servant, I may mention: (1) the duty to give reasonable notice in the absence of custom or
express agreement; (2) the duty to obey the lawful orders of the master; (3) the duty to be
honest and diligent in the master‟s service; (4) the duty to take reasonable care of his
master‟s property entrusted to him and generally in the performance of his duties; (5) to
account to his master for any secret commission or remuneration received by him; (6) not
to abuse his master‟s confidence in matters pertaining to his service . . .

i. Obligation to pay wages

The obligation to pay wages to the employee by the employer includes: timely wages; payment
in full amount and payment in monetary terms. The payment has to be as agreed.

 Reigate v Union Manufacturing Co. Ltd (1916) 1 KB 582

 Devonald v Rosser & Sons (1906) 2 KB 608
 Browning v Crumlin Valley Collieres Ltd (1926) 1 KB 522

ii. Obligation to provide work

A contract of employment implies that there is work to be done whenever an employee is

engaged, or at least, there is a specific task for which he/she has been engaged by the employer.
However, this obligation does not extend to the details of the actual work to be done. Sometimes,
for one reason or another, it is possible that upon engagements, there may be no ready work for
the employee to do. Absence of work does not relieve the employer of his/her obligation to pay
wages to the employee.
  Turner v Sawdon & Co. (1901) 2 KB 653
 Collier v Sunday Referee Publishing Co [1940] 2 KB 647 (QB)

iii. Willingness to serve

Within the terms of contract, the employee must be ready and willing to serve. This implied
term means and includes consistent attendance at his or her workplace. Therefore, only
excusable absence must be entertained. Excusable absence may include: obtaining prior
permission; immediately reporting to the employer as soon as the circumstances arise that the
employee cannot report to work; sickness of the employee and a problem relating to a member of
the family or death.

This implied term also extends to an obligation to obey reasonable orders of the employer. The
courts will look at the general terms of the contract, efficacy and fair balance of obligations, and
respect of human rights.

 Ottoman Bank v Chakarian [1930]AC 277

 Johnstone v Bloomsbury Health Authority [1991] 2 All ER 293 (CA).
 Cresswell v Board of Inland Revenue [1984] ICR 508 (QB)

iv. Co-operation

The obligation means and includes an employee exhibiting reasonable levels of cooperation.
 Cresswell v Board of Inland Revenue [1984] ICR 508 (QB)

v. Fidelity/Mutual trust and confidence

Employees are expected to serve their employers with fidelity and in good faith to avoid as much
as possible engaging themselves in business competing with their employer‟s.

The employee is also not expected to disclose information to members of the public without
consent from the employer or directly to another competitor. The courts have treated this
implied term, generally, strictly against the employer. Before an employee can be condemned
responsible for information that he comes across during his time at office, it must be proved that:
a) Disclosure is in bad faith;
b) Intended to injure the reputation of an employer and
c) The reason for the restriction must be reasonable in the circumstances

On the other hand, an employer must also act responsibly and in good faith.

 Eastwood v Magnox Electric plc [2004] UKHL 35, [2005] 1 AC 503

 vi. Working for one employer
An employee cannot serve two masters at a go.
British Syphon Co Ltd v Homewood [1956] 2 All ER 897, [1956] 1 WLR 1190

vii. Duty to compensate employees for injuries suffered. The employer is expected to
indemnify the employee in respect of any injuries that an employee suffers in the course
of employment. This common law duty has been incorporated in legislation in Uganda.
 Workers Compensation Act
 Wilson & Clyde Coal Co.Ltd v English (1938) AC 57
 Gregory v Ford (1951) All ER 121
viii. Employer to take reasonable care of the health and safety of employees

Employer‟s liability to the employee arises from an implied term in the contract which
presupposes that the employer besides providing the work will provide the place where the work
will be done.

To the extent that the employer is to provide the place where the work is to be done, it means
that the employer is liable under common law but also now in statute (Occupational Safety and
Health Act, 2006) to ensure that such work place is reasonably safe for the employee to carry out
work.

In Groves v. Lord Wibourne [1898] 2 QB 402, the HOL confirmed the existence of an
employer‟s general duty of care in tort with regard to the safety of his employees. The duty was
affirmative in nature and could not be discharged merely by delegation.

In Wilson and Cylide Coal Co. Ltd v. English (1937) 3 All ER, Lord Wright observed that the
employer‟s responsibilities in employer-employee contract related to the following:

1. The provision of competent fellow workers

2. The provision of safe materials and a proper system of work
3. The provision of a safe workplace
4. The provision of safe equipment (relates to heavy machinery)
With regards to the duty to provide a safe workplace and a safe working system, it is still open to
the employer to plead and he can avoid and minimise liability, that is, that in the circumstances
he took reasonable steps to ensure safety of his employees. Essentially, this means that the duty
is based on fault (based on tort). The common law duty of care is based on the tort of negligence
established under the case of Donoghue v Stevenson [1932] AC 562 where Lord Macmillan
observed that “the categories of negligence are never closed.” Therefore the employer‟s duty
was spelt out in several cases following the ruling in Donoghue v Stevenson.
The duty, therefore, to provide a safe workplace is intended to protect, the employee from
injuries which he or she may suffer in the course of employment, but also disease he or she may
acquire in the course of employment (the duty is preventive in nature).

In regards to disease, the liability continues even after the employee has ceased to be an
employee, as long as the disease suffered by the employee can be traced back to his employment.

 Donoghue v Stevenson [1932] AC 562

 Wilson and Cylide Coal Co. Ltd v. English (1937) 3 ALLER HOL
 Wilson v Tyneside Cleaning Co. (1958) 2 QB 110
 Walker v Notherumberland Council (1993) ALLER 737
 Frost v Chief Constable of South Yorkshire Police (1989) 2 AC 455
 General Cleaning Contractors Ltd v Christmas (1953) AC 180; (1954) 2 All ER 1110

ix. Reasonable competence, skill and care

This is term is implied on the employee. An employee is expected to act with reasonable
competence, skill and care. Whereas the employer is obliged to provide a reasonably safe place
of work, there is a corresponding duty on the employee to act with reasonable skill and care.

To be successful in the defence of contributory negligence, the employer should show that the
employee did not do his part, either arising from negligence or complete disregard of instruction.
The employer will only be liable to the extent of the injury for which the employee did not
contribute.

xi. Termination of Employment

Much as the employer has an inherent right to terminate the services of an employee, he must do
so reasonably. Reasonable notice must have either been agreed upon by the parties at the time of
entering into a contract or as provided for in the default rules under the legislation. Non-
compliance with the requirement of reasonable notice would suggest that the termination was
either unfair or unlawful.

Reasonable notice has been interpreted to mean not only giving notice but in some cases,
depending on the nature of the complaint against the employee, he/she must be heard before
he/she is terminated.

 Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555, 594

TERMS IMPLIED BY STATUTE/LEGISLATION

Employment Act, 2006

i. The employer shall afford the employee reasonable rest

ii. There are also expected to adhere to the notice periods of termination
 iii. Equal opportunity
iv. Protection from sexual harassment
v. Reparation
vi. Obligations to transport the deceased employee, including their belongings and
immediate family
vii. Respect the contractual holidays and statutory holidays
viii. In case of termination, unless it is because of gross misconduct, to give the employee
a fair hearing
 Labour Unions Act, 2006
i. Recognize duly registered labour unions for purposes of collective bargaining
ii. Cooperate with the labour union
 The National Social Security Fund Act and Income Tax Act, Cap 222

Obligation to make certain remittances on account of the employee for purposes of social
security and for the purpose of compliance with tax

 Constitution of the Republic of Uganda, 1995

See Chapter 4: Obligations to respect human rights

 Workers Compensation Act, Cap 225

The Workers Compensation Act provides for compensation to workers for injuries suffered and
scheduled diseases incurred in the course of their employment.

 Occupational Safety and Health Act, 2006

Occupational Safety and Health Act, 2006 imposes duties on persons, most generally employers,
requiring them to conduct their operations to the standards required by the legislation or incur
criminal liability. S.13 of the Act imposes a duty on the employer for the protection of
employees. The employer must take all practical and reasonable measures to ensure the safety of
workers and the general public from dangerous aspects of the employer‟s undertakings.

EXCLUSION OF IMPLIED TERMS

Exclusion of the Provisions of the Employment Act

An agreement which excludes any provision of the Employment Act is void and of no effect,
except if the exclusion is permitted under the Act (s.27 of Employment Act). Permissible
exclusion includes:
 1. Members of the UPDF

2. Provisions of working hours for persons in Managerial positions (s.51)

3. Provisions of working hours for persons working in family establishments employing not
more than 5 members (s.51).

Based on the common law doctrine of freedom of contract, parties should be free to exclude any
implied term by express terms. However, implied terms may not be so easily excluded from the
agreement. Implied terms under the contract of employment are meant to help in shaping
effective and fair obligations between the employer and employee.

Exclusion of common law terms

As a default rule, in general, it should be open to the parties to exclude any implied term by
express agreement. It should be noted that implied terms may not be so easily excluded as is
commonly supposed because they serve to constitute the basic elements of the contract of
employment relationship. For example, exclusions or limitations on the employer‟s right to direct
the performance of work begin to turn the proper classification of the contract towards a contract
for services. Exclusions of basic liberties of the employee to quit by terminating the contract
edge the proper classification of the contract towards forced labour or a non-contractual kind of
servitude.

In principle express terms should prevail over implied ones. However, in contracts of
employment, the reverse appears to be true. It is not simply that it is difficult to conceive of an
employment contract which did not contain implied duties of obedience, co-operation, and care.
A work relationship that did not give the employer a certain residual discretion of this kind
would lack the element of personal subordination (or „control‟ in an extended sense) which
separates the contract of employment (or service) from the contract for services.

In conclusion, the implied terms are embedded in the principles of contract of employment. For
example, the idea that the contract of employment involves an exchange of work for
remuneration is reflected in the implied terms, including the employer is supposed to provide
work, the employee is supposed to serve and the employer is supposed to pay for the work done:
no wages are due till the specified work has been completed. Furthermore, the legal expression
of the employee‟s integration into an organization can be found in the employee‟s duties of
obedience and fidelity. Several implied terms by common law are incorporated in legislation to
emphasis their significance.