When a contract is agreed upon between employer and employee, you don’t expect it to be broken. However, sometimes the terms aren’t adhered to, and the contract is breached.
These contracts are legally binding, so you need to understand what to do when they’re broken. You need to realize what could cause a breach of contract. A breached contract could lead to a legal claim with potential compensation.
In this guide, we’ll discuss what a breach of contract is, its consequences, and some of the most common contract breaches.
What is a Breach of Contract?
A breach of work contract is when the terms of employment aren’t met. Both employer and employee can be responsible for breaching these terms.
There are two different types of provisions on an employment contract: written terms and implied terms.
Written terms are preferred as protection for employees and employers. They are legally binding and signed off by both parties at the start of employment.
For example, written terms could be related to hours of work or salary.
Implied contract terms are unwritten terms based on reasonable expectations of both parties during employment. The following are examples of implied terms:
- Treating all employees with decency and respect.
- Providing a safe working environment.
- Ensuring your staff are properly trained and equipped.
Implied terms are legally binding so it’s possible that if these terms are broken, you could be liable.
What’s a Breach of Implied Contract?
A breach of implied contract works the same as a breach of written terms. However, they can be harder to prove.
For example, a court could conclude that employers must ensure the health and safety of their employees in accordance with legislation.
As an employer, you have a duty of care for all your employees.
Breach of Employment Contract by An Employer
As an employer, you have a responsibility against breaching the terms of the employment contract.
You need to be aware of what could cause a contract breach:
- Failure to meet the basic contract terms. Such as paying employees correctly and on time, providing notice periods and leaves.
- Failing to comply with company procedures and policies.
- Not following the correct health & safety regulations. For example, not providing PPE for your employees when required.
- Providing less than the minimum requirements set out in employment standards legislation
Breach of Employment Contract by An Employee
You need to make your employees aware of what could be a breach of contract. By making your expectations clear at the start of employment, you reduce the odds of a breach happening.
Some of the most common employee breaches are:
- Quitting your job without the correct notice.
- Theft or gross misconduct could lead to company losses.
- Not carrying out expected duties.
- Taking a high number of unauthorized absences.
How to Prove a Breach of Contract
Before deciding to raise a breach of contract claim, you need to make sure you can prove the contract was broken. Look at any past lateness, unauthorized absences, and misconduct to decide if there’s been a breach.
Make sure the contract exists, is legally binding and the other party has broken its terms.
You should also include a remedies clause within the employment contract.
What’s a Remedies Clause
A remedies clause in the contract could lay out how you will deal with any breaches after they happen. This will make the process easier for you in case a breach occurs.
Both parties should stick to this clause in the event of a breach.
What Are the Consequences of a Breach of Contract?
The implication of a breach of contract is decided by an employment tribunal. Both employer and employee can take the other party to court.
The court will decide the outcome of the case following a claim. Some of the consequences can include:
- Financial damages: The court can award the claimant with a financial reward. This is often used to place the claimant in the same financial position they’d have been if the contract had been performed.
- Equitable remedies: This could be the cancellation of a contract. These are often awarded when financial damages are seen as inadequate.
- Injunctive relief: A court order granting immediate relief by requiring a party to do, or retain from doing, a specific act pending the outcome of the proceedings.
Get Advice on Breach of Contracts Today with BrightHR
You need to avoid contract breaches whenever possible. Breaches of contract could lead to disruption, financial losses, and potential legal claims.
Remember to include a remedies clause in your employment contracts, to make both parties aware of the steps which need to be taken.
If you need assistance with your contracts, BrightHR has a handy tool that will make the whole process easier for you.
Our HR document storage tool allows you to store your employee contracts on the cloud for you to make changes whenever required.
Have a question?
Ask away, we’ve got lightning fast answers for Canadian business owners and employers powered by qualified experts.