For many years now employment contracts have been drafted to ensure that an employer can terminate for long term sickness, despite the provision of ill health insurance. In the 1990s the High Court held that, without such an express clause, there will be an implied term that an employee would not be sacked for ill health. Otherwise this would deprive the employee of the very benefit designed to cover them during their illness.

In the case of Ali v. Petroleum Company of Trinidad and Tobago [2017] UKPC 2 the Privy Council has upheld a similar principle for employee loans. Where an employee is given a number of years to pay off a loan, there is an implied term that the loan will not be repayable if the employer dismisses the employee unless the employee is in repudiatory breach of contract (for example gross misconduct). The case raises a number of questions, for example does it mean that someone given a period to pay back a loan cannot be selected for redundancy? No it does not. All it means is if that, if they are selected for redundancy, the remainder of the loan will be waived. Might this impact other clauses in the contract? There is an argument that an employee who is given an initial guaranteed bonus will by implication still get the bonus even if they are dismissed during the qualification period for that bonus. Employers will have to be careful to set out express terms notifying the employee when they may still be dismissed and forfeit the bonus.

Implied terms can sometimes catch out employers. The advice has to be to check that the express terms in the contract cover foreseeable situations adequately. Ultimately express terms always trump implied ones.