Breach of Employment Contract Issues

Man signing a contract
Updated: In: Employment
We are not currently offering Employment advice services. The following is for informational purposes only.

Unsplash Licence – Leon Seibert

Generally speaking, the first thing employees do when they are having problems at work is check their employment contracts. These contracts can also be extremely useful for employers, as they can help to reinforce the rights and responsibilities of employees. In that sense, employment contracts provide clarity for both employers and employees when problems arise in the workplace. 

Both employers and employees can be in breach of contract if they break one or more of the terms. For this reason, it’s important to know how to deal with breach of employment contract issues. 

What Is An Employment Contract?

Firstly, it’s important to understand what an employment contract is. Put simply, an Employment Contract is a legally binding contract between employer and employee. Although employers are legally obliged to send employees a written Section 1 Statement setting out their main terms and conditions of employment on or before their start date, some fail to do so. A verbal contract is still legally binding, although it can be more difficult to determine the nature of the agreed terms in cases of dispute. Therefore, the first stage in assessing whether there has been a breach of contract in the employment relationship is to scrutinise the employment contract.

It’s worth noting that there must be a mutuality of obligation to establish status as an employee.

Breach Of Contract And Termination Of Employment

Breaches of contract can lead to Employment Tribunal claims upon the termination of employment in the following circumstances:

  • The employer’s conduct breaches a fundamental term of the contract of employment, enabling the employee to resign in response to the breach and claim constructive dismissal. An employee’s conduct, or rather misconduct, is so serious that it breaches the contract of employment, entitling the employer to summarily dismiss for gross misconduct.
  • The employer dismisses the employee without giving notice or pays in lieu of notice or in breach of some other term/s of the contract.
  • The employee breaches restrictive covenants, which typically prevent them from poaching or soliciting business from his employer’s or ex-employer’s clients for a set period after the termination of their employment.
  • The employee resigns without giving his employer contractual notice.

If you wish to keep the details of your claim private, read our guide on keeping your employment tribunal claim private.

Where To Sue For Breach Of Contract?

The employee may need to make a strategic decision about whether to sue in the Employment Tribunal or the County or High Court. There are pros and cons to each. Employees can only sue in the Employment Tribunal if their employment has already ended. There is also a limit to the damages that can be awarded for breach of contract in the Employment Tribunal of £25,000.

The time limit for Employment Tribunal claims is three months minus one day from the date of the breach. The advantage of the Employment Tribunal is that it is often quicker and simpler and the general rule is that the loser will not need to pay the winner’s legal fees.

If the employee’s breach of contract claim is worth more than £25,000, or the employee is still employed, then they will need to submit a claim to the County or High Court, depending on the value of the claim.

The time limit for submitting a breach of contract claim in these civil courts is six years, although it is unwise to wait so long for submitting a claim. These civil courts are also governed by the Civil Procedure Rules, which are far more complex and formal than the Employment Tribunal Rules of Procedure, but the advantage is that the loser does generally have to pay the winner’s legal costs (although it is unlikely that they would be ordered to pay 100% of the winner’s legal costs).

For Claimants with high-value claims with very strong prospects of success, the civil courts may be the most advantageous venue in which to sue.

Seeking Support For Other Legal Issues

No matter what your situation is, it’s wise to seek expert advice and guidance from a professional. Cartwright King’s team of legal experts can help with a range of legal issues, from family law and child care cases to driving offences and regulatory law. Our advice is backed by our experience in dealing with all manner of legal issues. Our team goes above and beyond to give you the support you need, for added peace of mind that your case is in good hands. 

We offer sound, honest, reliable legal advice to ensure that you’re prepared for the process. Working with a specialist Cartwright King solicitor gives you the assurance of having access to legal counsel who will advise you at every stage of your case. Get in touch with us today to discover how we can help.

Frequently asked questions.

I’m an employee. How do i take action in an Employment Tribunal for breach of contract?

You can only take action against an employer for breach of contract in an Employment Tribunal if your employment has ended.

What breach of contract damages can I be awarded?

A maximum of £25,000 in damages can be awarded if your claim is pursued in an Employment Tribunal.

If you’re seeking financial recompense of more than £25,000, or you’re still employed by the company against which you’re taking action, you will need to make a claim with the County Court or High Court (civil courts) – depending on the value of your claim.

Making a claim through the civil courts tends to be more complex compared to an Employment Tribunal, but you have six years in which to submit a claim.

However, should you lose your case in the civil courts, you may be liable for your employer’s legal costs.

Can my employer make a counterclaim?

Employees who wish to sue their employer for breach of contract should bear in mind that the employer would be entitled to countersue them for any breach of contract by the employee.

I’m an employer. How do I pursue a breach of contact claim?

An employer may also sue the employee in certain circumstances. For example, if the employee resigns without working their notice period and the employer has to pay for a locum to cover his work or sustains other losses, the employer can sue for those losses.

Legal Disclaimer.

All advice is correct at time of publication.