Dealing with a breach of the employment contract
Published 15 June 2020
Working relationships encounter problems and rarely last forever and often the key to resolving a problem can be found in an employment contract.
An employment contract is a legally binding document that sets out the expectations, rights, and obligations that will govern the relationship between an employer and employee.
It confirms that both parties agree on the terms and conditions and consent to adhere to them. Both employees and employers can breach an employment contract.
When such a breach occurs it can create a situation that is acrimonious, cause irreparable damage to a working relationship and lead to costly legal action.
A breach of contract occurs when one party breaks one of the terms of the agreement (1). An employer can breach a contract in a number of ways, which include changing working hours without consultation and agreement or failing to follow appropriate procedures for grievances, disciplinary actions, and dismissals.
An employee can also breach an employment contract in a number of ways, such as committing an act found to amount to gross misconduct or leaving without providing appropriate notice.
It is always advisable to try and resolve any breach of contract informally. If the matters does lead to a legal claim being able to demonstrate that you tried everything possible to resolve the dispute will help your case.
This can include utilising an employer’s grievance process or trying to negotiate to resolve the problem. It can sometimes lead to a settlement agreement being reached, which can prevent protracted legal proceedings (2).
A settlement agreement is a legal arrangement that brings the working relationship to an end. The employer will usually pay the employee agreed compensation or a termination payment in full and final settlement.
If an agreement cannot be reached ACAS must be informed before a claim is made to an employment tribunal. Its ‘early conciliation’ service' will talk to both parties about the dispute to see if an agreement can be reached without having to go to tribunal (3).
Key to any such dispute between employer and employee is whether the employment contract has been breached and if so, how?
So what is the employment contract?
When an employer recruits an employee it must provide the individual with written terms and conditions, also known as written statement of employment particulars.
It should include details such as how much the employee will be paid, their working hours, sick pay, holiday entitlement and holiday pay (4).
An employment contract is made up of:
- Specific terms agreed in writing (‘express terms’), such as the employee’s pay and working hours
- Terms that are part of employment law (‘statutory terms’)
- Terms too obvious to be written (‘implied terms’) – it can still be a good idea to put these in writing, so everyone’s clear about their rights and responsibilities
- Terms put into the contract from other sources (‘incorporated terms’) such as a staff handbook or an agreement affecting many employees
Ideally an employer should provide the written statement of employment particulars within two months of the employee starting work.
However, there can be various reasons why this does not happen. Many people are employed without a written employment contract. Although it may not be in writing a contract does still exist.
This is because an employee’s agreement to work for an employer and its agreement to pay that individual for their work forms a contract.
Contracts and issues arising from them can be complex and far from straightforward. For example if the demands of the business change and an employer wishes to change the terms of the employment contract it can only do so through consultation and agreement with the employee.
Also some employment contracts may contain ‘restrictive covenants’, which seek to restrict the actions of a former employee after termination of their employment (5).
If you are thinking about pursuing a breach of contract claim it is advisable to get expert advice first.
(1) What is breach of contract? [Internet] www.citizensadvice.org.uk [Cited 15.06.2020] https://www.citizensadvice.org.uk/work/problems-at-work/employment-tribunals-from-29-july-2013/making-an-employment-tribunal-claim-is-it-worth-it/employment-tribunals-claims-for-breach-of-contract/
(2) Settlement Agreements [Internet] www.castleassociates.org.uk [Cited 15.06.2020] https://castleassociates.org.uk/support-centre/settlement-agreements-frequently-asked-questions-faq#q1
(4) What should a contract contain? [Internet] www.citizensadvice.org.uk [Cited 15.06.2020] https://www.citizensadvice.org.uk/work/rights-at-work/basic-rights-and-contracts/contracts-of-employment/
(5) Restrictive Covenants [Internet] www.jobsite.co.uk [Cited 15.06.2020] https://www.jobsite.co.uk/worklife/beware-restrictive-covenants-contract-employment-restrict-options-move-jobs-10827/
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