Breach of employment contract

If your employer breaks or breaches the terms of your contract of employment, it can all too often end up with you being unfairly dismissed or constructively unfairly dismissed, with little or no compensation for such poor treatment.

However, if you know what to look out for, you’re more likely to be aware of whether and how your contract has been broken. 

In that case, you’ll be better able to take action to avoid being dismissed or at least to ensure you leave your employment with fair compensation

See also our other guides on different aspects of employment contracts: Contracts for senior executives,  Employment contracts: an Employee guide and Can your employer change your contract?

What is an employment contract?

An employment contract – or contract of employment – outlines the terms on which you agree to carry out specific kinds of work for an employer and the salary/wages and other conditions that they agree to provide to you in return for the work agreed.

For further detail about different kinds of employment contracts and what should be included in them, see our Employment contracts guide. 

 

What kinds of breach of employment contract are there?

A breach of contract occurs when an employer takes action which breaks one or more of the terms set out in your employment contract.

You as an employee can also breach your contract, but we will focus here on breaches made by your employer. 

Some breaches of contract are regarded as more serious than others. The two main types are:

Minor or ‘non-material’ breach of contract

A minor (or ‘non-material’) breach is when part of an employment contract has been breached, but not seriously enough to entirely undermine the contract. 

An example is where your employer pays your outstanding travel expenses later than stated in your contract. Such minor breaches can be and are usually resolved informally.

However, if they keep recurring, then you might want to make a formal complaint or ‘raise a grievance’ in the first instance (and see below).

Serious or ‘material’ breach of contract

This more serious kind of breach occurs when an employer fails to honour an important part of your employment contract. For example, if they reduced your pay, or failed to pay you a payment due. 

Such a breach might be serious enough to justify your resigning and claiming constructive dismissal on the grounds that you had the right to assume that your employer had ended your contract.

Examples of breach of contract by employers

If your employer has breached your employment contract it means they have failed to act in the ways they promised to act, as set out in your contract. Common examples include:

Changes to your working hours or times

Where your employer changes your working hours, your start and/or finish times or makes any other similar alterations without your agreement.

Unlawful deductions from your wages

Where your employer asks you to take a pay cut or reduces your pay without your agreement.

Wrongful dismissal 

Wrongful dismissal is when your contract of employment is terminated by your employer, without giving you the notice required by your contract. (See our guide on wrongful dismissal for more detail)

Not paying for contractual entitlements

Your employer may be in breach of contract if they have failed to pay you for such things as travel expenses or holiday pay but your contract says you are entitled to it.

 

Are some breaches of employment contract more serious than others?

Some breaches of contract are regarded as more serious than others. The two main types are:

Minor or ‘non-material’ breach of contract

A minor (or ‘non-material’) breach is when part of an employment contract has been breached, but not seriously enough to entirely undermine the contract. 

An example is where your employer pays your outstanding travel expenses later than stated in your contract. Such minor breaches can be and are usually resolved informally. However, if they keep recurring, then you might want to make a formal complaint or ‘raise a grievance’ in the first instance (and see below).

Serious or ‘material’ breach of contract

This more serious kind of breach occurs when an employer fails to honour an important part of your employment contract. For example, if they reduced your pay, or failed to pay you a payment due. 

Such a breach might be serious enough to justify your resigning and claiming constructive dismissal on the grounds that you had the right to assume that your employer had ended your contract. 

 

What if you breach the terms of your contract?

What your employer can do if you breach the terms of your contract depends on the severity of the breach. Ideally, your employer should try to resolve the issue with you informally. 

However, a more serious breach by you might result in disciplinary action being taken against you or even dismissal. Your employer also has the right to sue you if you significantly breach your contract although in practice This doesn’t happen very often.

 

What can you do if your employer breaches your contract?

Double-check your contract and if you believe your employer has breached it, there are several actions you could take which include:

Resolving your employer’s breach of contract informally

If it’s not a serious breach and you want to stay employed, then you could try to resolve it by informal discussions with your employer.

Raising a grievance about the breach

If the breach is more serious and if informal approaches don’t work, then you may wish to raise a grievance about the issue.

Negotiating an exit package with compensation

If you decide that you want to leave your employment because of a serious breach, you could try to negotiate a settlement agreement that would include financial compensation. 

Making an employment tribunal claim

If negotiations don’t succeed and you get dismissed as a result, you could make an employment tribunal claim for breach of contract and/or unfair dismissal, depending on the circumstances. 

The maximum claim you can make at an employment tribunal for breach of contract is £25,000. For anything above this, or in a case that doesn’t involve you being dismissed, you would have to make a civil court claim (see below).

Claiming for breach of contract at a county or high court

Some employees would do better to make a civil claim to a county or high court. Here there are higher claim limits than in the employment tribunal as well as longer time limits for making your claim (up to 6 years). Breaches that don’t involve dismissal can also be heard at these courts.

Claims of up to £50,000 can be heard in the county court and anything in excess of that will be heard in the high court. 

We strongly recommend that you consult a qualified employment lawyer before deciding to take a breach of contract claim to either a county or high court.

Next steps

Well done if you succeed in informally resolving your breach of contract issue and are happy to continue in your employment. You need do nothing more for the time being.

Aim for a settlement agreement

If you don’t succeed in informally resolving the problem and you don’t want to stay in your employment, you can seek a settlement agreement with your employer which gives you fair compensation for being poorly treated. 

If you want help with negotiating a settlement agreement, Monaco Solicitors are specialists in this field. We may be able to offer you a ‘no win no fee’ arrangement for negotiating a settlement on your behalf.

If you have managed to negotiate a settlement agreement with fair compensation, we can advise you on the terms of your settlement and ‘sign it off’ for you, at no charge. (Your employer is required to pay the cost of this – see our guide on  signing a settlement agreement.)

Consider an employment tribunal – but only as a last resort

If your employer won’t negotiate and/or won’t consider a settlement agreement, then you may have to take your case to an employment tribunal as a last resort.  

You will need a good case with plenty of supporting evidence before you consider a tribunal route.  See our overview guide on employment tribunals and guide for claimants for more detail on what’s involved with going to a tribunal.

Contact Us

We may be able to offer you a free consultation, so get in touch to find out more:

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