An implied employment contract is usually created between an employee and the employer. The terms or conditions between the employer and the employee are outlined in a legally binding employment agreement or contract.

What Does an Implied Employment Contract Contain?

The contract includes a detailed description of the terms under which the employee will work for the employer. Most contracts include the salary the employee has agreed to work for and any health benefits the employee will receive after working a set amount of time or hours. In addition, leave, retirement, and grievance procedures are usually laid out in the contract among other details.

What Is the Purpose of an Implied Employment Contract?

An employment agreement has the purpose of creating a clear understanding between the employer and the employee, thus protecting the employer's interest and assuring the employee is treated reasonably. Employment contracts can be explicit or implied and may be in written form or verbally discussed. Both are considered to be a valid contract.

What Is an Explicit Contract?

It is very important to understand the difference between explicit and implied contracts, especially when working for an employer. This can help the employee fully understand what is expected of him or her. It will also help ensure the relationship between the employee and the employer maintains clear lines of communication.

All the details discussed in terms of employment may be interpreted as an employment agreement. A contract that is clear and precise in specific job duties, exact pay per hour, and the schedule of work hours is considered an explicit contract, whereas, unspoken details that the employer and employee expect to be understood as part of the employment agreement are considered an implicit contract. Most employment jobs are carried out under both explicit and implied contracts.

What Are Implied Contracts?

Implied contracts are likely to be created between an employer and employee as comments and discussions take place. Through training manuals and handbooks, employers will make an effort to be specific in the terms and conditions to maintain control over the employment. As employees work for an employer, any reading material and verbal discussions can develop into implied contracts.

Employers tend to be specific and clear in communication with employees to avoid the risk of wrong, misconstrued information from being conveyed.

How Do Employment Contracts Work in California?

In California, employees who work with no written contract are at risk of being terminated at any time, for any reason. Of course, employers are not legally able to terminate employees due to discrimination. Such employees are considered to be at-will employees. However, at-will employees fall under the implied contract since at-will implies that with no written employment agreement, either party is at will to terminate employment for no reason at any time.

In regards to employment law, an implied contract is basically an understanding that unless an employer has a good reason, the employer will not terminate the employee's employment. In the event the employer fires an employee without a good reason, and the employee can prove that an implied contract was established between the employer and employee, the employee can take legal action against the employer for wrongfully terminating employment.

Proving that an implied contract existed will have to be established. Providing proof that the employer's behavior did indeed create an implied contract can only prove this. California courts are required to examine the circumstances of the relationship between the employer and employee to determine if an implied employment agreement existed.

How Do Courts Determine If an Implied Contract Exists?

The courts will look for the following evidence to determine if an implied contract existed:

  • The length of employment with the employer.
  • Performance evaluations to research the employee's performance on the job.
  • Performance recommendations suggested by the employer to employee.
  • Previous history of discussions between the employer and the employee to determine if statements were made to ensure the future of the employee.
  • Employment handbook to see if employer violated steps in properly terminating the employee.
  • History as to the hiring and firing practices of the employer.
  • Timeline of the employee's qualifications for various benefits, such as medical benefits and retirement.
  • Look at comparable industries to see written or implied contracts are the normal practice for hiring.

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