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Breach of Employment Contract

A breach of employment contract is a common cause of dispute between an employee and an employer. An employment contract may be broken when one party to the contract fails to follow a term in the contract.

Breach of contract can occur in a wide variety of circumstances. The common theme is that the conduct of one party is contrary to the terms of the employment contract. If the breach of contract causes you to lose money, then you may have a claim against the other party for compensation.

Examples of breach of contract in employment law include:

  • Failure to pay employees’ salary, expenses, holiday or sick pay appropriately

  • Failure to pay an employee in lieu of notice after a dismissal without notice

  • Changing terms and conditions of employment without agreement

  • Failure to follow the correct procedure for disciplinary or grievance matters

Contracts of employment

A contract of employment is an agreement between an employer and employee and is the basis of the employment relationship.

It is important to put a contract in writing - it can save potential disputes further down the line. There can be misunderstandings over what is or what is not in a contract and this is one of the main causes of employment tribunal claims.

A contract begins as soon as an offer of employment is accepted. Starting work demonstrates acceptance of the terms and conditions offered by the employer.

Employees are legally entitled to a Written Statement of the main terms and conditions of employment within two calendar months of starting work. This should include details of things such as pay, holiday entitlement, working hours, sick pay etc.

An existing contract of employment can be varied only with the agreement of both parties.

Some people might assume that a contract of employment consists of only those things that are set out in writing between an employer and an employee. It's true that many of the main issues, such as pay and holidays, are usually agreed in writing.

There are other contractual terms called implied terms. These are not expressly or explicitly stated because, in the main, they are fairly obvious to both parties to the contract of employment.

Implied terms include statutory rights, such as the right to equal pay and duties, such as a duty of care, or are

  • too obvious to mention: for example, you would not expect a contract to say that 'an employee will not steal from an employer'

  • necessary to make the contract work: for example, if you are employed as a driver it is assumed that you have a valid driving license

  • custom and practice: some terms of a contract can become established over time.

Changing or varying a contract

What do you need to do if you want to change the contract of employment for your employees? This may be due to economic circumstances and may mean changes to working hours, a reduction in benefits and/or pay.

An existing contract of employment can be varied only with the agreement of both parties.

When any change to a contract of employment occurs the employer should give written notification of the changes in writing,

An employer proposing to change an employee’s contract of employment should fully consult with that employee or his or her representative and explain and discuss the reasons for the change.

Employees are far more likely to accept changes if they can understand the reasons behind them and have an opportunity to express their views. Involving employees makes good business sense, as it drives up levels of employee engagement and motivation.

Variations to the contract can be agreed verbally or in writing. It is preferable for any agreed changes to be recorded in writing.

Where a variation to the contract has been agreed and the changes concern particulars which must be included in the written statement of terms and conditions, the employer should give written notification of the change to the employee, within a month of the change taking effect

There are some important steps you must take if you wish to try and change a contract - especially around consulting with employees.

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