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Breach of Contract

What is a breach of an employment contract?

A contract may be broken if either an employer or employee fails to follow an express or implied (unwritten) term in the contract. Common examples are a failure to give an employee notice to terminate the contract of employment, to pay in lieu of that notice, to pay contractual wages or bonus, or to allow a person to start work under a pre-agreed contract.

What is the remedy for a breach of contract?

A breach of contract claim will usually result in claim for damages as compensation for the breach. In some circumstances a Court or Tribunal may also decide the terms of the contract of employment if they are in dispute. The compensation usually reflects the actual loss suffered and so any award will reflect the effect of taxation and either any alternative earnings, or a failure to take reasonable steps to mitigate the loss suffered.

What is the difference between wrongful and unfair dismissal?

Wrongful dismissal is a breach of contract claim where the employer has failed to give proper notice to terminate, or the grounds to terminate do not allow the employer to dismiss without notice. Unfair dismissal arises if there is no fair reason for dismissal or a fair procedure is not followed. There is no minimum period of service, unlike an ordinary unfair dismissal claim where the employee must have two years’ continuous service. An unfair dismissal claim must be also brought within 3 months, whereas the time limit for contractual claims is 6 years from the date of breach.

Where can a breach of contract claim be pursued?

Breach of contract claims can be pursued in both Court and Tribunal proceedings, however compensation in a Tribunal is capped at £25,000. There is no cap on the compensation that can be sought in Court proceedings (depending on whether a claim is pursued in the Small Claims Court, County Court or High Court). Advice should be sought on where to bring a claim and the implications on the compensation that can be awarded.

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