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Dealing with Breach of Employment Contract: Employers & Employees

20th July 2022

When commencing a new job, you will often be required to sign a new employment contract. Your employment contract will outline the duties, administration details, and the relationship between the employer and the employee. So, what happens if there is a breach of an employment contract? Whether breached by the employer or the employee, a violation can lead to a range of outcomes for both parties. 

wilson/ryan/grose is a leading Townsville law firm, specialising in employment law and workplace relations. Within this article, we will delve into dealing with a breached employment contract by either an employer or an employee.

What is an Employment Contract?

Employment contracts are not like any other contract; they are supported by national legislation that dictates minimum requirements for employees and employers. When employment contracts are first prepared, the terms are dictated for the various responsibilities of both parties, the salary, leave requirements, and more.

If any of these terms are broken, it is known as a breach of the employment contract. Employment contracts are legally binding documents, so violations from either party can result in severe punishment. If you think your employer or employee has breached the contract, we recommend you speak to a wilson/ryan/grose employment lawyer to discuss your options.   

What Should Be in An Employee Contract? 

An effective employee contract should cover the following as a minimum: 

  1. Wages
  2. On which terms the employee will be hired 
  3. Employee entitlements
  4. Superannuation
  5. Termination notice period
  6. Probationary periods 
  7. Policies of the business or company  

Breach of Employment Contract by Employer

If you are an employee and your employment contract has been breached, you may be entitled to receive compensation or seek damages in court. If the following has happened to you, then you might fit the criteria: 

  • Your employment was terminated without reasonable notice.
  • You were terminated without notice for misconduct without reasonable grounds.
  • As a fixed-term employee, your contract was terminated before the end of the term. 

Breach of Employment Contract by Employee

On the other hand, an employer may seek compensation for damages or for financial loss if an employee breaches their contract. This can come as a result of:

  • Employee misusing employer’s own confidential information.
  • Exploitation of intellectual property of the company. 
  • Quitting without giving the proper notice as per the contract.  

Several post-employment restraints can have long term impacts on former employees after cessation of employment. A breach of employment contract by an employee can still occur if the employee no longer works with the company, depending on the terms in the contract.

Wrongful Dismissal vs Unfair Dismissal

These two terms are often incorrectly used interchangeably by employees. Wrongful dismissal is a claim regarding a breach of an employment contract where an employee’s termination is against the terms stipulated in their contract signed with the employee at the commencement of work. On the other hand, unfair dismissal is a right of action that an employee may have if they believe the termination to have been harsh, unjust, or unreasonable as dictated by the Fair Work Act. 

Proving an Employment Contract Breach

To prove to a legal body that there has been a breach of employment contract, you must show the following: 

  • The existence of an employee contract
  • The period of time that employment was served
  • Substantial proof that either the employee or employer failed to honour the terms within their contract 

What Happens in a Breach of Employment Contract Claim? 

If you are concerned that there has been a breach of contract, and you have not been able to resolve the matter directly with the other party, the issue should then be escalated to seeking legal advice. 

Your legal team will consider your options which may include:

  1. Compensation for the financial loss resulting from the breach, depending on the terms in the broken contract. The employee may also claim compensation for:
  • Any wages that were lost or bonuses 
  • Injuries suffered, including psychiatric or psychological 
  • Missed opportunities for further employment 
  1. Applying to a court seeking that the other party perform their obligation as written in the contract. Known as specific performance, it is a very complex area of the law, and it’s strongly recommended you speak to solicitors wilson/ryan/grose to discuss if specific performance is the right option for your unique set of circumstances.  

Speak to An Employment Lawyer Today

A breach of an employment contract is a complex field of law. If you’re an employer or employee, it is strongly recommended that you look to the services of the knowledgeable team at wilson/ryan/grose before making any claims.

The wilson/ryan/grose Townsville office has been providing legal counsel for over 125 years - we have a long history of helping our clients get the best possible result. If you’d like to speak to a qualified, experienced, and professional employment lawyer today, call our firm on 1800 974 529.

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