Breach of an Employment Contract

Employment contracts help protect the interests of both the employer and the employee. Either the employee or the employer can be in breach of an employment contract. But when an employee breaches an employment contract, steps must be taken to ensure a fair and equitable settlement. 

What Are Employment Contracts For?

Employers use employment contracts for many different reasons, including:

  • to ensure adequate notice of intent to quit
  • to ensure company data is secure
  • to secure sensitive customer data
  • to set guidelines for employee behavior, dress code, etc.

What is Considered Breach of Contract?

The employment contract is a legally binding document between the employer and the employee. If the employer or the employee acts in discordance with the terms of the contract, then a breach of contract has occurred. Breaches of employment contracts may also be in reference to implied terms or verbally agreed terms.

What To Do If an Employee Breaches Contract

If an employee of your company breaches your employment contract, swift and actionable steps must be taken. Any delay in enforcing the terms of the contract can work against your company in a court of law.

First, alert the employee that he has breached the terms of the contract. Give him a copy of the employment contract with the specific terms highlighted that he has breached. In the interests of everyone, it’s often a good idea to allow the employee to make amends by altering his actions so he is in compliance with the employment contract. For instance, if an employee hands in his notice for one week, but the contract terms specify two weeks, give the employee the chance to change his notice to two weeks.

If the employee can’t or won’t meet the terms of the employment contract, get in touch with an attorney right away. The attorney will review the circumstances and let you know if there is a case that is worthy of a lawsuit against the employee. 

Next, determine the financial loss to your company caused by the breach of employment contract. Compensatory damages are usually awarded only in instances where the employer can show a financial loss that is due to the words, actions or non-actions on the part of the employee. 

Things to Remember When Filing a Breach of Employment Contract Suit

Discretion is of the utmost importance in cases of employment contract breaches. Only the involved individuals should be informed of the situation. Company cultures can be a hotbed for gossip and false dissemination of information. You don’t want the employee to hear of any actions on your part except those that your company is taking, or that your attorney is taking. You also don’t want the other employees to begin taking sides in the suit. Using discretion will enable the legal action to proceed without encumbrance.

Finally, gather all relevant records that pertain to the breach of contract. Your attorney will need these in order to represent you in court, should it come to that. If you would prefer to settle out of court, your attorney can assist with this course of action as well. For more information about breaches of employment contracts, please contact us today. 


Diana Tough

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