A breach of employment contract generally happens when either an employer or an employee fails to meet the terms outlined in a contract. A breach could take various forms such as unpaid wages, demotion, wrongful termination, false promises, missed benefits, or failing to honor agreed-upon duties or conditions.
Having a proper understanding of what constitutes a breach and knowing your rights is essential for taking the right steps and seeking appropriate remedies. Working with an experienced employment attorney can help simplify the process and shorten your journey to relief.
At My Job Lawyer, we help employees navigate the complex procedure of a breach claim by providing expert advice, gathering evidence, and representing you in negotiations or court. Our goal is to make sure you receive the compensation and protection you deserve. If you’re facing a breach at your workplace, now is the time to reach out and seek redress.
In this article, we’ll discuss employment contract breaches, their implications, the legal process involved, and the steps to take if you’re facing one.
What Is a Breach of Employment Contract?
A breach of employment contract occurs when an employer or employee violates the terms agreed upon in the contract. An employment contract is a legally binding document that exists between an employer and an employee. It outlines the terms and conditions of the employer-employee relationship, including job role and responsibilities, salary, policies, working hours, employee rights, and other employment conditions.
While contracts can be either written or verbal, it is usually advisable to have them in writing to avoid misunderstandings. Additionally, the Employment Rights Act mandates companies to provide a written document of the key employment terms to new hires before the first day of their employment. There are different types of employment contracts, and they include full-time, part-time, fixed-term contracts, and apprentice agreements.
By law, employees in the United States are entitled to certain statutory rights, which apply whether or not they are included in an employment contract. Employers cannot offer less than these legal minimums. Examples of these rights include receiving at least the federal or state minimum wage under the Fair Labor Standards Act and protection from discrimination under Title VII of the Civil Rights Act.
Other important laws include workplace safety under OSHA, leave entitlements under the FMLA, and accommodations for disabilities under the ADA. A breach could come in the form of unpaid wages, false promises, or wrongful termination. In the next section, we’ll dive into the various types of breach of contract for both employers and employees.
Breach of Employment Contract by an Employee
When an employee breaches an employment contract, an employer needs to respond promptly. Acting quickly can help reduce potential financial losses and other negative effects. Some common examples of employee contract breaches include:
Breach of Express Terms
Express terms refer to specific conditions outlined in an employment contract that both the employer and employee agree upon. As previously mentioned, they often include job duties, working hours, or other agreed-upon terms. When an employee fails to adhere to these conditions, a breach of contract occurs. Some examples of employee contract breaches include:
- Failing to carry out job responsibilities as stipulated in the employment agreement. For instance, refusing to carry out tasks that their role requires.
- Working for a competitor or running a competing side business, even when the contract clearly states that you cannot.
- Not providing proper notice periods when resigning. For example, giving only one week’s notice when their contract terms specify longer.
- Disclosing private company information, such as trade secrets, customer lists, internal strategies, or proprietary data, that the contract mandates the employee to keep confidential.
- Showing up at work under the influence of alcohol or drugs when the contract clearly forbids it.
- Violating the employer’s code of conduct, often outlined in the employee handbook, such as using inappropriate language or dressing inappropriately at work.
Breach of Implied Terms
Even if certain expectations are not stated in the employment contract, they can still be legally implied under employment law. When an employee fails to meet these implied contract terms, it is considered a breach of contract. Common examples of breaching implied terms include:
- Gross misconduct, like bullying or victimizing a co-worker, thereby creating a hostile work environment.
- Exhibiting behaviors that damage the employer’s reputation or bring the business into disrepute. For example, posting harmful or defamatory content about the business or employer online.
- Acting dishonestly, for instance, falsifying financial or sales data.
- Being extremely careless at work and causing avoidable mistakes or damage.
- Using company equipment for personal reasons without permission.
- Disrupting the workplace by starting conflicts, spreading rumours, or behaving in a way that orchestrates tension among co-workers.
Breach of Employment Contract by an Employer
A breach of employment contract by an employer occurs when the employer fails to meet the terms agreed upon or does something that violates the employment agreement. Since an employment contract is backed by law, just as in the case of the employee, the employer is also mandated to follow both the express terms written in the contract and the implied terms required by employment law. Here are some common examples of employer breach of contract:
Failure to Pay Wages or Benefits
Employer breach of contract happens when employers fail to pay wages, overtime, bonuses, travel expenses, pension entitlements, and other compensation as stated in the employment contract. For example, an employee’s contract promises a monthly salary and health insurance, but the employer reduces the pay without notice or agreement, or stops providing health insurance. This automatically constitutes a clear breach of contract.
Wrongful Termination
An employer may breach the employment contract through wrongful termination, which occurs when an employer terminates an employee in ways that violate the terms of their employment agreement. Wrongful dismissal can also come up if an employer fails to follow the agreed-upon notice period, does not provide notice pay or pay in lieu of notice, or otherwise disregards contract terms.
For example, if the contract stipulates that the employee can only be fired after three written warnings, but the employer dismisses them immediately without any warning, this counts as a breach. However, employers are allowed to carry out summary dismissals for gross misconduct, but it must be done in a way that complies with employment law and the employer’s own policies.
Failure to do so may give the employee grounds to pursue legal action, claim compensation, or seek other legal remedies for breach of contract. In essence, it is important to pay particular attention to contractual obligations, notice periods, and legal processes as this helps to minimize the risk of wrongful dismissal claims.
Sudden Change of Job Duties Without Agreement
Making changes to an employee’s job assignments without prior notice or agreement could be treated as a violation of the contract. For example, an employee who was hired as an accountant suddenly gets his role changed to manual labor without consent. This breaks the original contract terms and disrupts the employment relationship.
Not Providing Agreed Benefits
When an employment contract specifies that an employee is entitled to certain benefits, such as paid time off, bonuses, reimbursements, health insurance, or other perks, the employer is legally obligated to provide them. Failure to do so constitutes a breach of employment contract and can lead to serious legal consequences. However, it is best to try to resolve minor issues, such as delayed payment of salary or bonuses, informally before involving tribunals and courts.
What Legal Rights and Options Do Employees Have in Case of a Breach?
When an employee faces a breach of contract, the law provides them with several legal rights and options to protect them. A proper understanding of these protections is essential for employees to safeguard their financial interests and maintain a healthy employment relationship.
1. Right to Sue
The law allows employees the legal right to pursue legal action if their employer fails to meet contractual obligations. This includes filing a contract claim in a civil court or through employment tribunals, depending on the jurisdiction. However, keep in mind that you can only obtain compensation, commonly referred to as compensatory damages, if you can prove real financial loss, such as unpaid wages.
Other factors, such as emotional distress or hurt, feelings are not covered. Seeking legal counsel from an employment lawyer can help simplify the legal process while ensuring that employers are held accountable for breaches.
2. Right to Compensation
Employees can also be entitled to financial compensation for losses suffered on account of the employer’s actions. The aim of this is to reinstate the employees to the financial position they would have been in if the employer had not violated the contract agreement.
These compensations can cover lost wages and benefits such as salary, health insurance, or vacation pay. It can also include future earnings that were lost, especially if the breach resulted in wrongful termination. However, the law expects the employees to also try to reduce their losses by looking for a new job. If they do not take these steps, the amount of “damages” they receive could be reduced.
3. Right to Terminate the Contract
If an employer violates the terms of a contract in a critical way that affects the core parts of the agreement, the employee has the right to treat the contract as terminated. Additionally, if an employee quits because of a serious breach, such as a change in their job responsibilities or repeated unpaid wages, they can claim constructive dismissal. This is treated as being fired, and this allows them to seek legal remedies. In this case, ending the contract allows the employee to:
- Stop working under a contract that is no longer valid.
- Claim compensation for lost wages, benefits, or other damages caused by the breach.
- Protect themselves from further harm due to the employer’s failure to meet their obligations.
4. Other Remedies
In some cases, employees may have additional legal options, such as:
Specific performance: In this situation, a court can order the employer to perform what the contract requires, such as giving a public sector employee their job back if they were previously fired. However, this is usually rare in private jobs because courts usually avoid forcing someone to work.
Injunction: A court can also stop the employer from taking certain actions, like enforcing a non-compete clause or carrying out an unlawful firing.
How Does the Legal Process and Procedure Work for a Breach of Employment Contract?
A breach of contract claim often involves a series of complex steps that can be quite challenging for most employees. The first step is usually to understand your rights and the protection that the law affords you. Below, we’ll give a step-by-step process on how the procedure works.
1. Gather Evidence: The first step is usually for the non-breaching party to gather all relevant documentation, such as the employment contract, messages, emails, pay stubs, attendance records, witness statements, and generally anything that can support their claim.
2. Notify the Employer of the Breach: The next step is to formally report the breach internally. This could involve notifying the HR, the line manager, or any other relevant authority within the organization. This step is often required before you can pursue external legal action and most times, results in a settlement without needing further escalation.
3. Seek Legal Help: After reporting the issue, you should consider seeking legal counsel from an employment attorney. They can help evaluate your case and review your winning potential. They will also advise you on the appropriate place to file a claim, which could be either a civil court or an employment tribunal.
4. Alternative Dispute Resolution: Before filing a lawsuit, it is often advisable to attempt to settle through negotiation, mediation, or arbitration. These methods allow both the employee and employer to discuss the problem and reach an agreement without going to court. Mediation involves a neutral third party who helps both sides find a solution, while arbitration lets an independent arbitrator make a decision that is usually binding.
Using ADR can save time, reduce legal costs, and preserve the working relationship where possible. Even if an agreement isn’t reached, attempting ADR can show the court that you tried to resolve the issue reasonably.
5. File a Claim: If, after all these, the breach is still not resolved, you can go ahead to file a formal claim. This process often involves submitting all relevant evidence that clearly proves that there was a breach of contract. Depending on where the claim was filed, the court or tribunal then goes ahead to review the evidence.
6. Trial: If the case is not settled, it proceeds to a formal hearing where both parties present opening statements and witness testimony. After this, the judge or tribunal issues a final verdict.
7. Resolution: If your claim is successful, you are then awarded compensation for lost wages, benefits, or other financial losses. Where applicable, you can also be reinstated to your former role.
What Evidence and Documentation Is Required for a Breach of Employment Contract Case?
One of the most essential evidence needed is the contract itself because it shows the terms your employer agreed to and their inability to uphold it. Hence, it is important to keep a copy of your signed offer letter, employment agreement, or any other collective bargaining agreement.
You should also gather financial proofs such as pay stubs, bank statements, stock options, or details of benefits like health insurance or retirement plans to prove the amount owed. Performance reviews, commendations, emails praising your work, or any records showing that you fulfilled your job responsibilities are also important.
This is because they demonstrate that you held up to your own side of the contract. Also, save evidence of the breach, including emails, texts, voicemails, meeting notes, or witness statements. They can help to show that the other party failed to follow the contract. Lastly, document any financial losses you suffered because of the breach, including lost wages, missed bonuses, or other harm.
Why Is Professional Legal Representation Important in Breach of Employment Contract Cases?
An employment lawyer can help guide you through the entire process of a breach of contract claim by giving you the necessary advice needed to ensure your case is successful. They can also help in handling the relevant paperwork, gathering evidence, negotiating settlements, and representing you if the case goes to trial.
Without proper legal guidance, you may overlook certain crucial information, misinterpret employer obligations, or even accept a settlement that is far below what you are entitled to. Beyond these, a lawyer also helps you understand the legal consequences of the employer’s action, evaluate the strength of your claim, and explain your rights.
A solicitor or barrister can also protect you from intimidation, unfair tactics, or coercion. They can also offer emotional support during the rigorous legal process. Having professional representation can significantly increase your chances of a successful outcome.
What Are the Next Steps for Employees Who Have Experienced a Breach of Contract?
If you are experiencing a breach of contract at your workplace and don’t know what to do, the first step is to stay calm and gather as much information as possible. You can start by reviewing your employment contract or offer letter to understand what terms were broken. The next step is to collect evidence of the breach, such as missed payments, emails, messages, or other documents that prove the employer did not meet their obligations.
As previously mentioned, it is advisable to first raise the issue internally before filing a lawsuit. If, after reporting the issue internally, the problem continues, then the best course of action is to consult an employment lawyer. They will help explain your rights, advise you on your options, and help you decide whether to negotiate, file a complaint, or take legal action.
Ready to Seek Legal Justice?
Dealing with a breach of employment contract can be both overwhelming and frustrating. For employees, the thought of standing up to their boss can even be more frightening. However, understanding your rights and taking the necessary steps can help you protect yourself and secure the compensation you deserve. In case you have been fired for no just cause, lost wages, missed benefits, or suffered other financial harm as a result of your employer’s action, it’s time to take action.
My Job lawyer can help you through the process of a breach of contract claim, ensuring that not only are your rights protected, but you can achieve a fair and just outcome. Our experienced employment lawyers can assist you in gathering strong evidence, negotiating settlements, and representing you in court if need be. Contact us today for a free case review.
FAQs
Here are some common questions about breach of employment contract and what to do when you’re facing one.
What Are the Consequences of Breach of Employment Contract?
A breach of an employment contract can lead to financial loss, stress, and career damage for an employee. When this happens, the employee may decide to file a claim for unpaid wages, benefits, and other losses. If the case proves successful, the employer is mandated to compensate the employee based on court order.
How to Prove Breach of Employment Contract?
To prove a breach, keep a copy of your employment contract, save emails, text messages, meeting notes, witness statements, or pay stubs that show the employer’s inability to meet their obligations. Also, properly document any financial losses you suffered as a result of their actions. Keep records that prove that you keep up your end of the contract.
What Are the Potential Costs Associated With a Breach of Employment Contract?
The costs of a breach can be both financial and non-financial. Financial costs may include:
- Lost wages or unpaid benefits (salary, bonuses, vacation pay, pensions).
- Legal fees for hiring a lawyer, solicitor, or barrister to pursue your claim.
- Court or tribunal costs, such as filing fees or administrative charges.
Non-financial costs include stress, emotional distress, career disruption, and time spent managing the dispute. Some employees may also experience reduced trust or workplace morale. In serious cases, unresolved breaches can lead to long-term career or reputational damage.
What Are Common Mistakes Employers Make that Lead to a Breach of Employment Contract?
Common mistakes include failing to pay wages or benefits, changing job duties or pay without consent, denying leave, wrongful termination, breaking confidentiality rules, or not providing a safe work environment.
