To what extent are the terms of a contract binding?
What are incorporated terms and are they legally binding?
If one document is referred to in another it is incorporated,
which means it forms part of the other document. Thus a reference to a company
policy, collective agreement or employee handbook will incorporate that
document into the contract or the offer letter, provided the wording makes this
clear. Incorporated terms are express terms so it is very important to be clear
in the contract exactly what is incorporated. If, for example, the contract
refers to a company handbook, a tribunal may view the entire handbook as
contractual. It would therefore be sensible to indicate in the handbook exactly
which parts are incorporated into the contract of employment and which are not.
Although collective agreements are not usually legally binding, the terms they
contain can become legally binding as between the employer and the employee if
the agreement is incorporated into the contract of employment. It is important
to make sure that the wording of an incorporated document does not conflict
with the contract, as this could lead to a dispute.
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