Updated 2014.

We know there are a lot of employees out there at the moment who are having their employment terms changed, usually against their wishes. We thought we’d look at this in more detail, specifically focusing on what ‘custom and practice’ means and how and when a ‘custom and practice’ might be come part (a term) of your contract of employment. For more information, see our piece on changing your contracts.

We have to start by explaining what a contract is! A contract of employment is an agreement between you and your employer.  There is always a contract between you and your employer, even if you do not have anything in writing, because you have agreed to work for your employer in return for them paying you.

The terms of an employment contract set out what you and your employer have agreed and what you can expect of each other; your rights and duties. There are several different types of terms and some do not need to be written down in your employment contract (although it is always best for them to be in writing to avoid confusion).

Where do contract terms come from?

Contract terms can come from a number of different sources – for example they could be:

  • Verbally agreed (these are called express terms)
  • In a written statement or contract or similar document. Key terms, such as work, location, hours, pay, holiday and notice periods, legally have to be given to the employee in writing by the end of their second month of employment in the form of a written statement. This is not a contract, but good evidence of the terms of the contract (also express terms)
  • In an employee handbook or on a company notice board (also express terms)
  • In an offer letter from your employer, when you started work (also express terms)
  • Required by law, for example, your employer must pay you at least the minimum wage, give you the right to holiday entitlement.
  • In collective agreements (which are agreements between your Employer and a trade union or staff association – you should be told which agreements apply to you – whether you are a member of the trade union or not).

Implied terms

These are not written down anywhere, but are understood to exist because of the conduct of the parties. They are usually fairly obvious to both parties to the contract without ever being recorded in writing. If there’s nothing clearly agreed between you and your employer about a particular matter, then it may be covered by an implied term. Terms are implied into a contract :

  • In order to make the contract workthe most important of these is the ‘duty of mutual trust and confidence’. This means that you and your employer rely on each other to be honest and respectful. If the employer fundamentally breaches that trust and confidence, an employee may be justified in treating his or her contract as having been unlawfully breached
  • Because they are obvious or assumed – so it is not felt necessary to write them down, or because it will be assumed that such a term exists.
  • By custom and practice – these are specific to an employer or type of trade/industry. They are arrangements that have never been clearly agreed but over time have become part of the contract.  For example, you might get a Christmas bonus every year, or the business might close early on particular days, although this is not written down. If a company practice or management policy has become a part of your contract then your employer must stick to it, and cannot normally change it without your agreement (consultation) – see our guide to how contracts can be changed.

In a 2014 case about unused flexi-time, bought under the ‘unauthorised deduction of wages’ legislation, Vision Events (UK) Ltd v Paterson.  Paterson was entitled to flexi-time where if he worked more than his contractual 45 hours per week he was entitled to take time off, at a time to suit his employer.  The details of how the flexi-time scheme would work on termination of employment (for accrued but untaken flexi-hours) was not documented in his contract or handbook.  Four years later he was made redundant and he asked to be paid for the flexi-time he had accrued which was in excess of 1,000 hours.  His employer offered to pay part of the hours but Paterson refused and the offer was withdrawn.  Paterson made a claim to Employment Tribunal for unfair dismissal and unlawful deductions from wages.  The Tribunal rejected his unfair dismissal claim, but agreed there had been an unlawful deduction of wages and ordered Vision Event to pay him over £12,000.

The employer appealed and the Employment Appeal Tribunal agreed and overturned the original Tribunal decision.  The EAT applied the usual tests of whether to imply a term into an employment contract – whether it was necessary to make the contract work or whether it was a term which both parties would have said was agreed between them.

The EAT concluded that it failed both tests – the Tribunal had asked if the term should be implied in order to make the contract fair, but that was not the correct question.  The fact that the Employer had made a “goodwill offer’ did not alter the position, they were not legally required to pay the employee. This was not a majority decision by the EAT, the claimant was close to winning his case as a minority accepted his position that it was obvious that he did not agree to work for no pay.  For more details about unauthorised deductions.

More details about custom and practice

Whether a particular practice/policy, that is not written down, has become a term (part) of your contract can be very difficult to decide. There is no fixed time limit after which something is definitely part of the contract, it will be up to an Employment Tribunal to finally decide if the time period has been sufficient to render the activity/practice a permanent one under ‘custom and practice’ (so which then becomes a term of your contract, that your Employer cannot change without consulting with your first, otherwise they would be in breach of contract).

In order for an entitlement to become established by custom and practice, it must (we’ve used the example here of someone working extra hours, for a period of time, that are not specified in their contracts):

  • Usually be “established”, i.e. long-standing. You need to ask how long the practice has been in place and has it been followed without exception for a period of time?
  • Be “reasonable”. It must be fair and not arbitary; it must have been continuously applied and automatically given each time to all employees. You need to ask did the Employer treat the matter the same each time or differently? Is it reasonable, for example, for an employee to expect to work the additional hours?
  • Be “notorious”, i.e. well-known and expected to be received (e.g. was the policy of giving extra hours formally communicated to the employee?). Ask how the practice or policy was made known to the employees – it must be communicated to all interested parties.
  • Be “certain”. It must be clear-cut and be followed without exception for a period of time (e.g. how certain is it that extra hours would be granted – have there ever been any exceptions where additional hours were not given; did the hours fluctuate?).

Sometimes custom and practice is used to interpret an express term. For example the meaning of “reasonable overtime” in a written contract may be best understood by looking at how the organisation operates its overtime policy. However, where a benefit is discretionary (which could possibly include the provision of overtime) the fact that it has been granted for a number of years will not necessarily convert it to an implied term, only a Court can decide.

Custom and practice is not applicable to duties which are properly specified as, and carried out on, a genuinely temporary basis.

If you are in the situation where your Employer has changed a term of your contract that is not expressly agreed, but you believe may have become implied over time through ‘custom and practice’, then the first thing you should do is raise a grievance with your Employer to see what their response is. If you are not satisfied with the outcome of this then your only other recourse is to take your Employer to an Employment Tribunal for a breach of an implied term of the contract.

It also has to be said that if an Employer wishes to make a change to a term of a contract (whether it is an existing term or one implied by custom or practice) and justifies the need for this change as a necessary ‘business reason’, even if they are in breach of an employees contract by making the change, a Court may decide the Employers actions are justifiable for business reasons.

If you are an Employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to Lesley at The HR Kiosk  – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

Photo by Jason Saul

  • Great info.!

  • stu

    i started working for my current company 6 years ago and have been promoted but never had a new contract to sign. over the past 4 years i have been working the same hours (7am-3pm) with the same days off and it has never changed and i am very happy with this arrangement as i get to see my 4yr old son every day and look after him on the weekends. but now my employers want to change my working hrs and days off, i will end up back on nights, working weekends and see very little of my family.

    my company are open 24/7 and my shift would have to be covered by someone else (not many people like my early shift) so its not as if they are getting rid of my shift

    any help as to where i stand regarding custom and practice would be greatly appreciated, i thought i would be ok

    • lesleyfurber

      Hi Stu, thanks for your message. I’m afraid I can’t really add any more advice than is given above. Have you employers said why they want to change your hours? Have you explained to them you are not happy? Regards and good luck. Lesley, Workline

  • laura

    HI I need advice. I was a section leader for years then was made assist till sup. I did that for bout a yr then the manager asked me do do a different role and said he couldn’t cut my rate of pay as he asked. As it was a side way move I was section leader again but he never changed it on system. We have had 3 other managers since then and they have all known me as a section leader. I have done it for bout 5 or 6 yrs. Now the new manager is saying that I can’t do that rile. I have to either be an assist till sup again or take a pay cut but still do the work I am doing now. Is there anything I can do to stop this

    • lesleyfurber

      Hi Laura, have you thought about putting in a grievance, so you bring this to their attention properly and get them to consider what they are doing? Regards, Lesley, Workline

  • Peter Martin

    Hello. I am a supervisor for a renewable energy company that works as a main subcontractor for the asset owner, this has been the case for 6 years. My particular business unit has recently moved site offices from our site at a small harbour to a much larger site office that already has another asset running from it (same firms), there has also been another contract negotiated between the firms. The asset owner is now trying to introduce a shift rota system that incorporates different start and finish times during the week and weekend cover. The first we (supervisors) knew about this was when it was emailed to us from the asset owner, no consultation from our employer at all. This is a new shift working pattern that we have not done before ie:: for the last 6 years, and involves completely different working times including weekends. We have always had a rota system that involves weekend work for technicians but not for supervisors. The Supervisors also have a job title that refers solely to the asset we work on, the new weekend shift pattern concerns looking after more than one asset, this is a contradiction to the job title we hold. Can it be deemed that it has been Custom and Practise to work the hours we do (above and beyond our normal business hours, as the asset demands) during the week, this does not involve weekend working, that has now been demanded. Can you please advise as to my position with this new shift pattern. many thanks Peter

  • Dave

    Hi. A wee bit of advice please.
    I have been employed in my current role for 7 years. I am M-F contracted 37 hrs per week. For the last 6.5 years my employer has allowed me to work 3 hours each day overtime at enhanced rates ( 60 hours per month equaling approximately £8000 per year).This practice carries on continuous throughout the working year apart from holidays or any sickness. This overtime is recorded on a time sheet which is submitted, checked, and authorized by my department who then pass this to finance for payment. The practice has remained unchallenged and even forms part of the weekly rota with other colleagues. Another colleague has worked this practice for 10 years and 2 others have worked it 6 and 5 years. I (we) have become accustomed to this overtime which we now regard as part of our wage which reflects upon our domestic and financial affairs. My employer may be about to question the 3 hours a day overtime !!!!! Could we claim that the overtime is now contractual as a result of implication and customer practice.

    • hi Dave, thanks for your message. This could certainly be custom and practice – however, I’m afraid, your employer can change your terms (whether contractual or by custom and practice) – here is more information about how they can do this and what you can do – https://www.crunch.co.uk/blog/small-business-advice/2008/09/24/written-statements-and-contracts/
      Good luck. Regards, Lesley, The HR Kiosk

    • Dave

      Hi, Thanks for the reply.
      There is growing concern that my employer may be about to overall totally our positions by change in job description and shift patterns ( 5 from 7) with the eradication of enhanced rates. This is due to a company restructure. Based on this could there be a claim for compensation on the substantial loss due to the 3 hours.
      This sounds complicated and it is !!

      • Hi Dave, the only claims you would probably have are breach of contract, constructive dismissal (if you resign) or unfair dismissal if they reissue you with new contracts with new terms. Regards, Lesley

  • mrbimble

    I would like some advice please. I have worked overtime for the past 9 years covering another employee’s holiday. This is not in my contract but I have been relied upon to do this for the 25 days of her annual holiday. This amounted to £2,500 gross on top of my usual salary and I have likewise relied on this extra money.
    Recently there has been a change of management and my boss actually came to me and asked if I was still happy with the arrangement and I told her that I was. However, although the employee that I cover took a week’s holiday last week, I was not asked to cover and instead 2 temps did the cover.
    I am not sure if I can do anything about this if I am overlooked again when the next holiday comes up. I have been told that I may have a case as it could be deemed as ‘custom and practice’. Is this right please?

    • Hr MrBimble, thanks for your message. Although this may now be custom and practice (only a court could decide if that was the case), your employer can ‘change’ your terms and conditions – you can see more details here https://www.crunch.co.uk/blog/small-business-advice/2008/09/24/written-statements-and-contracts/

      You could phone Acas for their advice if you wanted? Good luck. Regards, Lesley, The HR Kiosk

      • mrbimble

        Hi Lesley,
        Thanks for your reply. I shall wait and see what happens. I am member of the ATL as I work in a school, so will maybe ask them if I am overlooked over the next holiday.

  • Robert Fabry

    I hope you can help me. My company has just moved me into a position beneath my current grade, I held a management role and I have just been placed into a secondment within the company undertaking an engineering role which holds no management responsibilities. I am very unhappy about the situation and would like to know if I have any recourse in this issue. There is nothing to state that they can do this in my contract or in the staff handbook which was all I was given at the point of starting with the company. Thanks for your time and consideration.

  • Robert Fabry

    Sorry. Should also have said that I have been (verbally) told that at the end of the secondment my original role will not be there to return to.