Both employees and employers can bring a claim for a breach of contract in relation to binding contractual terms, whether express or implied within the contract.

The remedies available for such breaches of contract depend on whether the breach is a fundamental breach or not. A fundamental breach is one that is deemed serious enough to entitle the injured party not to continue to be bound by the terms of contract because of the conduct of the other party. To be fundamental, any breach must therefore go to the root of the contract and be incompatible with the continuance of the employment relationship. In such circumstances, the innocent party may choose to treat themselves as discharged from their duties to perform the contract and the contract can therefore terminate. In law, this is termed a repudiation of the contract.

For employees, such a breach will entitle them to claim constructive dismissal and to seek a remedy via an Employment Tribunal.

If successful, damages may be awarded to put the employee into the position he or she would have been had the employer performed their obligations in accordance with the contract of employment. Employers can be held liable for damages in breach of any express or implied term of the contract. For example:

  • Failure to give the required period of notice to terminate
  • Failure to pay for work done
  • Failure to observe their duty of mutual trust and confidence within the contract

Any contract of employment that is terminated by a breach of contract by the employer, most commonly for failure to give the required period of notice under the contract, is termed a wrongful dismissal.

In the same way, employees are liable to actions by employers for breach of contract on their part, if their actions constitute a breach in the same way. In these circumstances, it entitles the employer to discharge itself from any duties under the contract.

In both cases, the injured party needs to show some actual loss suffered by the breach of the other party before any award of damages is made.

 

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