Myth Buster -  Verbal Contracts are NOT Valid Contracts

This is a fairly common myth, but an important one. Why? Because a verbal employment contract, or one that is only ‘implied’, can be legally binding, meaning you can make a job offer without realising it.

If you make any form of promise relating to the individual’s employment, this refers to an ‘implied’ contract. If you discuss contract details with the individual, such as job duties, work hours, or pay & benefits, then this is an explicit verbal employment contract.

A binding agreement can be formed on the basis of verbal statements or via information from an employee handbook or company policy. This is because a large portion of the details in the handbook will be similar to those found in a written contract.

How to avoid an implied contract

Avoid making specific promises during the interview stage, or in the job offer letter should you choose to hire the individual. Such promises can include things like:-

“We’ll never fire you”

“You’re guaranteed to have a job here for the next 5 years”

But they can also be more subtle:

“Your pay & benefit package will be…”

“When your probationary period finishes…”