Breach of employment contracts: Guide for employers


Your employees have employment contracts with your business. It acts as an agreement between parties.

It documents the working conditions and requirements in and around your business, as well as employee rights, daily responsibilities, and their common duties within their role.

They’re the terms of the contract. But what happens if your employee breaches them, either willingly or by accident?

Our guide explains the process you’ll need to follow to remain compliant with British laws.

And remember, this can be a serious development for your business—you can get immediate employment law advice from us if you’re facing an accusation.

What is breach of contract?

It’s where a binding agreement isn’t honoured by an employee or employer.

If a term in the contract isn’t followed, that’s a breach. Below are two examples:

  1. The employee’s perspective: Not receiving their wages from you.
  2. Your business’ perspective: A staff member not working their contractual notice.

If this happens, it’s good business practice to try and sort the issue out informally. You can hold a meeting with the staff member in question and address the issue.

Mistakes can happen and this may clear up the issue straight away.

However, if there’s an obvious and serious breach then the employee can make a claim for an employment tribunal.

What constitutes a breach of employment contract?

It depends on whether the action is by the employee or your business. But there are various examples—we’ll start with your business’ perspective first before going into more detail:

  • If an employee quits without providing proper notice.
  • If a staff member leaves to join one of your competitors, even though your contract states they can’t.

Breach of employment contract by an employee

If this happens, you can try to settle the matter informally. But can an employer sue an employee for breach of contract? Yes, you do have the right to sue for damages.

However, remember that you’ll only receive damages if there’s a financial loss.

You should also remember that if an employee breaches their restrictive covenants, you can apply to the High Court for an injunction to stop the employee working for a competitor.

Employer breach of contract

If your business breaches contract, then it can result in an employment tribunal. Some of the examples you need to be wary of include not paying for:

  • Wages.
  • Travel expenses.
  • Holiday time.
  • Contractual sick pay.

You should also make sure you don’t breach the various other terms and conditions. And alongside that, follow the correct disciplinary, dismissal, or grievance policies you have.

A breach of contract in employment law can, in certain circumstances, lead to a constructive dismissal claim at an employment tribunal.

Remember, you should also be careful of breach of employment contract before start dates. In some instances, an employee can claim damages.

Need our help?

If you’re looking for help on this often complex legal matter, you can call us for immediate assistance: 0800 028 2420.

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