Breach of contract

Both employers and employees can be in breach of a contract of employment, so it's important to know what this is and what you should do if either you or your employer breaches your contract.

What a 'breach of contract' is

A contract of employment is a legally binding agreement between you and your employer. A breach of that contract happens when either you or your employer breaks one of the terms, for example your employer doesn't pay your wages, or you don't work the agreed hours. Not all the terms of a contract are written down. A breach may be of a verbally agreed term, a written term, or an 'implied' term of a contract.

Your pay has special additional protection and in some situations your employer may be prevented from taking money out of your pay even if this wouldn't be breaching the contract.

Breach of contract by your employer

If you think there's been a breach of contract, check the terms of your contract to make sure. If there has, you should try to sort out the problem directly with your employer first of all.

Mediation

Before taking legal action, you are required to try other ways to sort things out. For example, you might try mediation through the Labour Relations Agency.

Legal action

If you can't sort the problem out with your employer, you can decide to take legal action. Think carefully before taking any legal action against your employer. Ask yourself what you want to achieve and how much it will cost. Remember that you'll only get compensation (called 'damages') if you can prove real financial loss, if for example, your employer doesn't pay your wages. There's no compensation for distress or hurt feelings.

You should also remember that taking legal action might prompt your employer to take out a counter claim against you if they feel they have one.

If you are a member of a trade union, it would be a good idea to speak to them before taking any legal action, as some unions provide a legal advice service for their members. Otherwise, you could talk to a solicitor, or discuss your case with a Citizens Advice Bureau adviser.

If you do decide to take legal action, it can either be through an Industrial Tribunal or through a civil court.

Industrial Tribunals

To make a breach of contract claim through an Industrial Tribunal, your employment must have ended. There is also a cap of £25,000 on what a tribunal can award. As well as that, you need to know that if you wish to claim more you cannot first seek £25,000 from a tribunal and then go on to seek the balance from a civil court.

There are restrictions on the type of claim that can be made, for example you cannot make a personal injury claim through the tribunal, and there is a three-month time limit on making a claim.

Unlike civil courts, there are no fees for claims through the Industrial Tribunals and they are often quicker than the civil courts. 

Civil courts

To make a claim while you are still employed you will normally go through the small claims track of the county court or other civil court. There is a longer time limit than for an Industrial Tribunal, but there will normally be court fees to be paid.

Breach of contract by an employee

If you breach your contract, your employer should try to settle the matter with you informally, but they can sue you for damages in the same way you can sue them.

Your employer would normally use a county court for a breach of contract claim. The only way your employer would be able to make an application to an Industrial Tribunal is in response to a breach of contract claim that you have made.

Damages are only awarded for financial loss, if you don't give enough notice for example. They might be for the extra cost of hiring temporary staff to do your work, or for lost revenue.

You would still have the right to wages you earned before you left, plus pay for untaken statutory holiday. The most common breaches of contract by an employee are when

  • you quit without giving (or working) proper notice
  • you go to work for a competitor when your contract doesn't allow it
  • Notice

Questions about breaches of contract

Most questions about breaches of contract can be answered by checking the terms of your contract. You will find some common ones here.

Can an employer dock your pay for being persistently late?

You won't necessarily get paid for time that you're not at work but your employer should be careful about imposing extra penalties on top of this. If there's nothing in your contract that allows your employer to do so, they must pay you what you've earned and then decide whether to sue for any money they've lost because of your lateness.

What can I do if my employer always pays me late?

Not paying at the agreed time will often be a breach of contract. If you can prove you suffered a financial loss, for example, having to pay overdraft fees, you can claim this back as damages. Talk to your employer first. If it keeps happening, you could try to get a court injunction to stop them repeating this breach.

What is wrongful dismissal?

Wrongful dismissal is a breach of contract in the way you were dismissed, for example, without being given proper notice or without following the procedures in your contract. You can take action in the same way as for any breach of contract.

Is it a breach of contract to withdraw a job offer, or to turn it down, after it has been accepted?

Yes. The contract is made as soon as you accept the offer and both sides are bound by the terms until the contract is terminated.

Can the terms of your contract be changed?

Some contracts allow the employer to make changes. If yours doesn't, you and your employer must agree any change. Making changes without agreement is a breach of contract.

Where to get help

The Labour Relations Agency offers free, confidential and impartial advice on all employment rights issues.

Citizens Advice Northern Ireland can provide free and impartial advice. You can find your local CAB office in the phone book or online.

If you are a member of a trade union, you can get help, advice and support from them.

Seek legal advice from a solicitor or advice agency on contract conditions.

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