Employment contracts are a legally binding agreement between an employer and their employee. The contract lets both parties know what they can expect from one another, the rights they possess and the obligations they have. 

So, what happens when one party breaches their employment agreement

Naturally, there are going to be consequences. The severity of these consequences will depend on the seriousness of the breach, and what the contract itself says. 

As an employer, you could be at risk of breaching an employment contract yourself or dealing with an employee who has breached their agreement.  

Even though this is a scenario no one likes to imagine happening to them, it’s good to be aware and prepared with the right knowledge just in case. This way, both parties can go through a smooth dispute resolution process and a lower chance of any bad blood! 

Breaching An Employment Contract 

An employment contract is made up of terms the employer and the employee are expected to fulfil. In exchange, both parties receive some kind of consideration, usually in the form of a paycheck or labour. However, this system gets disrupted when one person doesn’t uphold their end of the agreement. 

For example, an employee could forget to complete a simple task. On the other hand, an employer might deny an employee their rightful leave. 

When this happens, a breach of contract has occurred. The aggrieved party will likely immediately seek a remedy, and they have a right to do so. 

Both of the above examples would be considered a breach of contract. However, their severity is unlikely to fall on the same end of the scale. When it comes to a breach of employment contracts, the type of breach can be placed in two general categories: 

  • Minor breaches
  • Serious breaches

Whichever category the breach falls under will determine the course of action the affected party can pursue. 

Can An Employee Sue Their Employer For Breach of Contract?

Yes, an employee can sue their employer for a breach of contract. However, it’s not common for a breach of contract case to immediately go to the courts. Usually, before a matter makes it into the legal system, there are a number of steps that are taken first. 

First, it’s necessary to look into the actual employment agreement to see if it lists any processes or requirements for what happens when a dispute arises. At times, a breach of contract dispute can be resolved from within the company by following a dispute resolution process set out in the agreement itself. Our expert lawyers can draft your contracts, tailored to your business’ requirements. 

If an employment agreement didn’t offer any solutions or the employee isn’t satisfied with the resolution, they have the option to contact the Labour Relations Agency for mediation. 

Upon mediation, if a reasonable conclusion still isn’t reached, the employee can pursue the matter in an Industrial or Employment Tribunal. However, current employees of a company cannot do this, only former employees. Therefore, if the employee is still working at your place of business, the tribunals will not be an option for them. 

What Happens if An Employee Breaches Their Employment Contract? 

As an employer, you’ll want to seek remedy for this wrong. You have just as much right as your employees. Again, the nature and seriousness of the breach will determine the course of action you can take. 

If the breach is minor, then it’s best to try and resolve it internally or seek a neutral, third party mediator. However, if the breach is much more serious and has caused you significant harm, then internal solutions or mediation may not always lead to a satisfactory conclusion.

In this case, you will be compelled to take more grave measures.  

Can I Make A Tribunal Claim For Breach of An Employment Contract? 

No, an employer cannot use the tribunals for a breach of contract. If a breach of contract from an employee is serious and has caused you or your business a significant loss, then it’s likely the courts will be your next step. 

A former employee of Bruce’s company resigned without giving proper notice and started their own company, which is in direct competition with Bruce’s. Their actions are a breach of their employment agreement and it has caused Bruce major financial loss.  

In this scenario, Bruce is likely going to have to pursue legal action through the courts to seek a remedy for his grievances. 

Please note that our legal team does not offer help with mediation or tribunals.  However, we can help you sort out your employment agreement to help you prepare for every scenario. That way, when something unexpected does happen, you’ll be in the best position possible. 

What Else Should I Look Out For? 

Contracts set out the important matters that any business is bound to come across.  If you’re running a business, there’s a high chance the employment contracts are not the only kind of legal agreement you will have entered into. There are  Supply Agreements, Terms and Conditions, Profit Share Agreements and Franchise Sale Agreements to name a few! 

For each of these, there’s a lot of promising potential. At the same time, there are also a number of things that can go wrong. It’s important to have contracts that look out for your best interest and are prepared for scenarios where matters don’t go as planned. 

Our legal professionals help small businesses every day with their contract needs and are able to see things that you may not- talk to us today about getting any one of your legal agreements sorted.  

Key Takeaways 

When an employment agreement is breached, there are a number of things that can happen depending on the individual circumstances. Aside from controlling your own conduct, you can help prepare for such scenarios by having strong employment contracts in place that protect your interests. To summarise what we’ve discussed: 

  • An employment contract is breached when an employee or an employer doesn’t uphold the terms of their agreement
  • Breaches can be categorised as either minor or serious
  • The severity of the breach will determine the course of action that can be taken 
  • Employment contracts can have provisions and process to help resolve such disputes
  • When an issue cannot be resolved internally, mediation is also an option 
  • Tribunals are available for former employees
  • If an employer has faced serious loss due to an employee breaching their employment agreement, they have the option to bring the matter before the courts 

Along with employment contracts, your business’ other legal agreements should also be designed in a way that prepares for circumstances like these 

If you would like a consultation on your employment contract and your options moving forward, you can reach us at 08081347754 or [email protected] for a free, no-obligations chat.

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