What is a Contract of Employment
For employers, they provide clarity, setting out the employee’s obligations and entitlements and help to minimise the potential for conflict arising from uncertainty once employment is underway and the vague “handshake” of agreement a dim and distant memory. Importantly they can also provide effective business protection – preventing exiting employees from setting up in competition, soliciting customers, and making use of confidential information, intellectual property and trade secrets (for more information on this please see our section on Breaches of Contract). That said, contracts of employment only offer protection if the applicable provisions are appropriately tailored and well drafted such that they can be enforced (or at least so that employees think they can be enforced and so are dissuaded from “trying their luck”).
For employees, they set out the duties your employer owes you and the entitlements you have. Contract terms will provide clarity around your place of work, travel obligations, holiday entitlements and benefits. Those glib promises that may be made at recruitment stage about sabbaticals and remote working may well be worthless if not contractually binding.
As a minimum, a contract of employment must contain certain information set out in law (s1 Employment Rights Act 1996). This includes the identity of the employer, the date on which employment will begin and terms relating to pay. Certain other information, such as provisions relating to sickness absence and notice, must be contained either within the contract of employment or a reasonably accessible document such as a policy or procedure in an Employee Handbook.
In addition to containing the minimum information required by law, employers should ensure that their contracts of employment are drafted to fit business requirements, taking into account the role and duties of the relevant employee and the sector in which the business operates. For example, if, in order to legally perform his role, the employee must be registered with a professional body, it would be sensible for his contract to require that he holds and maintains that registration (justifying termination of employment if he does not). Confidentiality clauses, post termination restrictions and intellectual property provisions can all be used to protect an employer’s business interests. For the employee, contractual incentive based schemes may also be included within the body of an employment contract. Frequent examples include bonus and commission schemes.
Whilst employers may be tempted to have lengthy contracts which include all provisions to cover almost every eventuality, some caution is to be advised. For example disciplinary and grievance procedures should never be contractual (although reference should be made to them to where the non-contractual policies can be found in order to comply with section 1 ERA 1996) as contractual procedures leave no wriggle room and are easily breached. The last thing an employer wants when trying to dismiss an employee for misconduct is to find that by failing to follow a procedure they have themselves breached the employment contract giving rise to potential claims by the employee.
Changing material terms and conditions of employment once a contract has been signed can be a challenge (see our section on Restructuring) so employers should give careful thought to contract terms at the outset, and review templates regularly.
Breach of Contract
Employment contracts form the foundation of the relationship between employers and employees, outlining the rights, responsibilities, and obligations of both parties. When one party fails to fulfill their contractual obligations, it constitutes a breach of contract, which can lead to significant legal and financial repercussions. We specialise in providing expert legal services for breach of contract cases, ensuring that your rights are protected and your interests are effectively represented.
Understanding Breach of Contract
A breach of contract occurs when either the employer or the employee fails to comply with the terms agreed upon in the employment contract. Breaches can be categorised into several types:
Minor Breach (Partial Breach)
This occurs when a party fails to perform a small part of their contractual duties. While the contract remains in effect, the non-breaching party may seek compensation for any losses incurred.
Material Breach
A material breach is a significant failure to perform under the contract, undermining the contract’s core purpose. This type of breach may allow the non-breaching party to terminate the contract and seek damages.
Anticipatory Breach
This occurs when one party indicates in advance that they will not be fulfilling their contractual obligations. The non-breaching party can take legal action before the actual breach occurs.
Fundamental Breach
A fundamental breach is a severe violation that allows the non-breaching party to terminate the contract and claim damages, similar to a material breach but with more severe implications.
Common Breach of Contract Scenarios
In the context of employment law, breach of contract cases often arise from:
Non-payment of Wages or Benefits
Employers failing to pay agreed-upon wages, bonuses, or benefits to employees.
Violation of Non-Compete or Confidentiality Clauses
Employees breaching non-compete agreements or confidentiality clauses outlined in their contracts.
Unlawful Termination
Terminating an employee without just cause or in violation of the contract terms.
Failure to Provide Agreed Working Conditions
Employers not providing the working conditions, resources, or support stipulated in the contract.
We offer a comprehensive range of services to address breach of contract issues, including:
Initial Consultation and Case Assessment
We will review the details of your case, assess the breach, and provide clear and honest advice on the best course of action.
Negotiation and Mediation
Our team will attempt to resolve the dispute through negotiation or mediation, aiming to reach a satisfactory settlement without resorting to litigation.
Drafting and Reviewing Employment Contracts
We assist in drafting and reviewing employment contracts to ensure they are robust, clear, and legally enforceable, minimizing the risk of future breaches.
Litigation and Court Representation
If a settlement cannot be reached, our experienced litigators will represent you in court, presenting a strong case to protect your rights and secure a favorable outcome.
Enforcement of Judgments
We provide assistance in enforcing court judgments to ensure you receive the compensation or remedies awarded.
Breach of Contract Limitation
The limitation period is a crucial concept that dictates the time frame within which a party must initiate legal proceedings. When it comes to breach of contract cases, the limitation period is particularly important as it defines the window of opportunity for an aggrieved party to seek redress for the breach. Understanding this limitation period is essential for both employers and employees to ensure their rights are protected and to avoid the forfeiture of potential claims.
Definition of Limitation Period
The limitation period for a breach of contract is the legally prescribed time limit within which a party must file a lawsuit or take legal action against the other party for failing to fulfill their contractual obligations. If the aggrieved party fails to initiate legal proceedings within this time frame, they are typically barred from pursuing the claim in court, regardless of its merits. This legal concept serves to provide certainty and finality, ensuring that disputes are resolved within a reasonable period.
Limitation Period in the UK
In the UK, the limitation period for breach of contract claims is governed by the Limitation Act 1980. Under this Act, the standard limitation period for a breach of contract is six years from the date the breach occurred. This means that a party has six years from the time the breach is discovered or should have reasonably been discovered to file a claim in court.
Six-Year Rule: The six-year limitation period applies to most types of breach of contract cases, including those involving employment contracts, commercial agreements, and other contractual obligations.
Special Circumstances: There are certain situations where different limitation periods may apply. For example, if the contract is a deed, the limitation period extends to twelve years. Additionally, specific statutes may prescribe different limitation periods for particular types of contracts or claims.
Commencement of the Limitation Period
Determining when the limitation period starts can be complex and depends on the nature of the breach. Generally, the limitation period begins to run from the date the breach occurs. However, there are instances where the limitation period may commence at a later date:
Continuous Breaches: In cases where the breach is ongoing or continuous, the limitation period may start from the date when the breach ceases.
Latent Breaches: If the breach is not immediately apparent and is discovered later, the limitation period may start from the date when the breach was discovered or should have reasonably been discovered.
Importance of Adhering to the Limitation Period
Adhering to the limitation period is crucial for several reasons:
1. Legal Rights and Remedies: Failure to initiate legal proceedings within the prescribed limitation period generally results in the loss of the right to seek remedies for the breach. Courts are typically strict about enforcing limitation periods to ensure fairness and avoid protracted disputes.
2. Evidence Preservation: Timely action helps ensure that evidence related to the breach is preserved and available for presentation in court. As time passes, evidence may be lost, and witness recollections may fade, weakening the case.
3. Certainty and Finality: Limitation periods promote legal certainty and finality by encouraging parties to resolve disputes within a reasonable time frame. This helps prevent indefinite threats of litigation and allows parties to move forward with confidence.
Exceptions and Extensions
While the limitation period is generally strict, there are certain exceptions and extensions that may apply:
1. Fraud and Concealment: If the breach involves fraud or deliberate concealment by the breaching party, the limitation period may be extended. In such cases, the period may start from the date the fraud or concealment is discovered.
2. Disability: If the aggrieved party is under a legal disability (e.g., minors or individuals with mental incapacity) at the time the breach occurs, the limitation period may be extended until the disability is removed.
3. Acknowledgment or Part Payment: If the breaching party acknowledges the debt or makes a part payment, the limitation period may restart from the date of acknowledgment or payment.
Breach of Contract Claim
Understanding the breach of contract limitation period is essential for both employers and employees to protect their legal rights and ensure timely resolution of disputes. The six-year limitation period prescribed by the Limitation Act 1980 provides a clear framework for initiating legal proceedings, but it is important to be aware of the specific circumstances that may affect the commencement and duration of this period. Consulting with experienced legal professionals can help navigate the complexities of limitation periods and ensure that claims are filed within the appropriate time frame, preserving the right to seek remedies for contractual breaches.
