Breach of Contract

When employers take on a new employee, they obviously hope that the working relationship will be fruitful and mutually beneficial. However, the reality of the workplace is that employees will not always fully perform their duties. Employees’ errors and oversights can have a dramatic impact on your business. In some cases, an employer may wish to end the employment contract; however, they will not always be legally permitted to do so. This will depend on whether the employee’s conduct constituted a breach of contract, and, if so, which remedies are available to the employer. Our expert Employment Lawyers have a wealth of experience in advising employers in such situations.

What constitutes a breach of contract?

In essence, any conduct which breaches a term of an employment contract can be classed as a breach of contract. However, an employee’s trivial mistake (for example, being fifteen minutes late to work on one or two occasions) will not give rise to any legal remedies. A breach must be more than trivial to be legally relevant. In an employment context, this might include breaching a restrictive covenant, harassing other employees, misusing company resources or continually failing to meet deadlines. 

Employers can outline conduct which will be considered a breach of contract in their employment contracts. This is subject to the requirement that such terms do not breach the Unfair Contract Terms Act 1977 (the High Court has confirmed that this applies to employment contracts). The conduct outlined as a breach of contract need not be exhaustive – an employee can still be in breach if their specific behaviour was not mentioned in the employment contract. It can, however, be useful in the event of a dispute to have a statement that the employee’s conduct is a breach of contract. It is very difficult for an employee to argue that they have not breached the contract by, for example, quitting without notice if a term of the contract states that they must give a specific notice period.

Our specialist Employment Law Team can draft appropriate terms complying with the relevant legislation to ensure that your business is protected in the event of a breach of contract. We can also review and revise existing contracts to ensure that they provide both the employer and employee with a clear understanding of conduct which constitutes a breach of contract and the likely consequences for such breaches.

Which remedies can I use for breach of contract?

It is important to note that not all breaches of contract give an employer the right to terminate. If an employee is not given the opportunity to remedy a breach, the employer might find themselves in breach of contract. An employee could, in this situation, bring a claim for unfair dismissal.

In order to terminate the contract, the term breached must be a “condition” (a vital term). Determining which terms are conditions is not always straightforward, and an employer cannot simply provide that all terms are conditions. If the employee breaches another term of the contract in a serious or fundamental manner (such that the breach goes to the root of the contract), the employer may be justified in terminating. It can be difficult to ascertain whether an employer is legally entitled to terminate a contract. If you are considering terminating an employment contract, it is always prudent to obtain legal advice to ensure that you do not risk the employee making a claim against you. 

If the employer would not be justified in terminating the contract, however, it may still be possible to claim for damages for financial loss caused by the employee’s breach of contract.

Damages for breach of contract are intended to put the employer in the position that they would have been in had the breach not occurred. For example, an employer could claim for the cost of hiring temporary staff if an employee refuses to work their notice period. It is also possible to claim damages where the employee has fundamentally breached the contract, and the employer would be legally permitted to terminate the contract but chooses not to. This might be the case if the employee has made a gross error, but the employer recognises this as an unusual incidence of bad judgment. If the employer wishes to continue the employment relationship, they can still claim damages in respect of the breach.

Can an employee bring a breach of contract claim against an employer?

The above information applies equally to both employers and employees. If an employer breaches the employment contract, the employee may decide to bring a claim against them. If you are facing legal proceedings because of an alleged breach of contract, we can work with you to ascertain whether you or your company’s conduct or policies do in fact constitute a breach of contract. If you do not accept that the contract was breached, our Employment Law Solicitors will ensure that robust legal arguments are put forward on your behalf. We are also skilled in alternative dispute resolution proceedings such as mediation. This can offer a means of resolving an employment dispute to the satisfaction of both parties without resorting to court proceedings or an Employment Tribunal.

Contact our Employment Solicitors London, Merseyside and Bath

Our specialist Employment Lawyers are experienced in advising employers in the event of a breach of contract. We can also draft and review your employment contracts to ensure that you and your employees have a clear understanding of the conduct which will constitute a breach of contract, providing legal certainty in the event of a dispute. If a former employee is alleging that they were unfairly dismissed, we will seek to put forward a strong argument on your behalf that their conduct constituted a breach of contract. We are based in London, Merseyside and Bath and have advised clients in a range of industry sectors across England.

If you would like to discuss an employee’s potential breach of contract, are considering redrafting contractual provisions on breach of contract, or have any other questions, please get in touch via our online contact form or call our team now on 0203 131 4039.

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