Breach of Contract

Employer

There can be a breach of either an express term contained in the Contract of Employment, such as to pay wages, or of an implied term. Implied terms include those that are too obvious to set out in the contract or those assumed to be included for example statutory rights, (such as an entitlement to Statutory Sick Pay and freedom from discrimination) and also the implied term of trust and confidence which applies to both parties.

If either you or your employee breaks any of the express or implied terms contained in the Contract of Employment, then a breach of contract occurs. If an employee suffers a loss as a result then he or she can bring a claim in the Employment Tribunal (if the employment has come to an end) or in the County Court.

If an employee resigns as a result of your breach of contract, then he or she may have a claim for constructive dismissal.

It may be that the Contract of Employment contains what are known as "Restrictive Covenants" which prevent the employee from working in competition with your business for a set period of time after their employment with you has come to an end. Restrictive Covenants must be carefully worded and required to protect the needs of your business to enable them to be enforced through the Courts.

If there has been a breach of a Restrictive Covenant, a letter should immediately be sent to the former employer pointing this out and seeking immediate confirmation the activities will end. Information can be sought as to the exact nature of the breaches. If this does not have the desired effect an Injunction can be sought and a claim brought for compensation in respect of the loss of business suffered.

Action must be taken promptly if a breach of the Employment Contract is suspected or has occurred in order to minimise losses.


Employee

A Contract of Employment is a legally binding agreement between you and your employer. When you or your employer do not comply with one of the contract terms there can be a breach of contract. This can happen if your employer does not pay you your wages or you do not work your agreed hours.

There can be a breach of the implied terms as well as the terms which are included in the written Contract, for instance if you are discriminated against.

If you think your employer has breached your Contract, for instance by not paying you the agreed sum, you should first of all approach your employer and try to sort this out directly. If this does not work you can bring a Grievance against your employer.

If the matter has still not been resolved you can bring a claim in the Employment Tribunal (but only if your employment is terminated) or in the County Court.

There are strict time limits for pursuing claims in the Employment Tribunal or in the County Court.

A common problem is where an employee leaves a company and either works for a competitor or sets up their own business in competition to their former employer. It may be this results in a breach of express terms contained in the Contract of Employment, commonly known as "restrictive covenants": In this instance, the employer may seek an Injunction preventing you from working in competition and also compensation for the financial loss the company has incurred as a result of your competing business.

The restrictive covenants must be carefully worded to protect the business and must not be seen as too restrictive, otherwise they may not be enforceable.

If you believe you may be in breach of restrictive covenants contained in your Contract of Employment, then please contact us for advice.

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