Breach of Contract Claims After Employment Ends

When an employment relationship ends, some contractual rights under the employment contract may survive termination. If an employer fails to honour those rights - for example by not paying wages due, holiday pay or notice pay - a former employee may be able to bring a breach of contract claim to enforce their lost contractual entitlements. This article explains how these claims work in England and Wales, the legal framework, procedural requirements, time limits, types of losses recoverable, and practical considerations for anyone considering a claim after employment ends.

Introduction to Post‑Termination Breach of Contract Claims

A breach of contract claim arises when one party fails to fulfil a contractual obligation, resulting in loss to the other party. In the employment context, this can include situations where an employer fails to pay sums due under the contract after the employment ends. The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994 gives employment tribunals jurisdiction to hear certain breach of contract claims that arise on, or are outstanding at, the end of employment.

Unlike many statutory claims such as unfair dismissal, breach of contract claims are contractual rather than statutory in nature, and are available to employees (and, in some cases, former employees) where contractual terms have not been honoured.

Legal Framework: When Can a Tribunal Hear a Claim?

An employment tribunal can hear a breach of contract claim only if the claim:

• arises on termination, or
• was outstanding on termination of employment.

Claims that fall into this category include unpaid wages owed at the end of employment, unpaid holiday pay, unpaid notice pay, unpaid contractual bonuses and other financially quantifiable entitlements under the contract.

However, tribunals cannot hear contractual claims that do not relate to the employment contract as such (for example, disputes about restrictive covenants, intellectual property or confidentiality), which must instead be pursued in the civil courts.

Examples of Contractual Breaches After Termination

Common contractual breaches that may give rise to a tribunal claim after employment ends include:

• Unpaid wages or salary due at termination.
• Unpaid holiday pay accrued up to the date employment ended.
• Notice pay when the contract required notice that was not honoured, and payment in lieu was not made.
• Unpaid contractual bonus or commission that is genuinely due under the terms of the contract.

Breach of contract claims can also include other express contractual terms such as pension contributions or contractual sick pay, provided they form part of the rights existing at the end of employment.

Tribunal Versus Civil Court: Jurisdiction and Damages

Employment Tribunal

Tribunals can hear contractual breach claims arising on or outstanding at termination. However:

• The maximum award a tribunal may order for breach of contract is £25,000.
• Employment tribunals generally do not award costs and have limited powers to award interest.

Tribunal claims are often most appropriate for lower‑value claims or where the breach overlaps with other employment rights (for example unpaid holiday pay also actionable as an unlawful deduction from wages claim).

Civil Courts

If the value of the claim exceeds the tribunal limit, or the claim does not qualify for tribunal jurisdiction, the former employee can pursue a claim in the County Court or High Court under ordinary contract law. In the civil courts:

• Damages for breach of contract are not capped by tribunal limits.
• A longer limitation period applies. Under the Limitation Act 1980, a contract claim is generally actionable up to six years from the date of the breach.

Time Limits for Claims

For breach of contract claims in the employment tribunal, the statutory time limit is generally three months from the effective date of termination or the last date on which the contract was in force.

This short deadline reflects the special jurisdiction of tribunals and differs markedly from civil contract claims. If a claimant misses the three‑month window for tribunals, they may still pursue a claim in the civil courts within the six‑year period allowed under the Limitation Act, provided the tribunal time limit has expired.

How Losses Are Calculated

In breach of contract claims, the aim of any award is to compensate for financial loss directly caused by the breach:

• For unpaid wages, holiday pay or contractual sums, the loss is the amount that ought to have been paid under the contract.
• Where notice pay is due, the loss may include pay and benefits that would have accrued during the notice period had the term been honoured.

Damages are generally limited to financial losses directly linked to the breach. Unlike discrimination or unfair dismissal awards, damages for breach of contract do not include compensation for injury to feelings or other non‑financial losses.

Counterclaims by Employers

If an employee brings a breach of contract claim to a tribunal, the employer may be permitted to lodge a counterclaim for alleged breaches by the employee, provided it relates to the same contract of employment and the original claim has not been withdrawn.

Counterclaims typically include situations where the employer asserts the employee owes money due to their own breach, and they usually must be lodged within a defined period after being served with the employee's claim.

Interactions with Other Claims

Many breach of contract claims arise alongside other employment tribunal claims, such as:

• Unlawful deductions from wages (which may have a longer backstop period for recoverable deductions).
• Unpaid holiday pay claims under statutory rights.
• Wrongful dismissal (which itself is a breach of contract relating to notice entitlement).

This overlap can enhance recovery options, particularly when statutory rights provide alternative claim routes or longer time limits.

Practical Steps for Claimants

1. Check contractual entitlements: Clarify what your contract says about pay, holiday, notice and other benefits.
2. Preserve evidence: Keep contracts, payslips, correspondence and documents showing sums owed.
3. Consider jurisdiction and limit: Decide if a tribunal is appropriate or if the civil courts may be necessary.
4. Act promptly: Tribunal time limits are strict and missing them may forfeit your right to claim in that forum.
5. Seek advice: Complex cases, high values or overlapping claims often benefit from specialist legal input.

Key Takeaways

After employment ends, a former employee may bring a breach of contract claim to an employment tribunal if contractual rights were violated and remain outstanding at termination. Common examples include unpaid wages, holiday pay and notice pay. Employment tribunals can only award up to £25,000 and generally require claims within three months of termination. If the claim value exceeds that limit or the claim does not qualify for tribunal jurisdiction, employees can pursue ordinary contract claims in the civil courts within a six‑year limitation period. Careful consideration of rights, time limits and gathering evidence is essential to pursuing a successful claim.

James William Steven Parker

James is the founder of UKLegalGuides.com and a former agent at the Ministry of Justice (UK). With a background in processing legal claims, he launched this platform to make the laws of England and Wales accessible to everyone.