How to Challenge a Breach of Employment Contract

A breach of employment contract occurs when either an employer or employee fails to comply with a term of the employment contract. This may involve non-payment of wages, unfair changes to working conditions, failure to provide notice, or breaches of implied duties such as trust and confidence.

Employment contracts are legally binding agreements governed by contract law and employment legislation, including the Employment Rights Act 1996. When a breach occurs, the affected party may be entitled to remedies such as compensation, continuation of employment (in limited cases), or termination of the contract and damages.

This article explains how to identify a breach, the legal rights involved, and the practical steps for challenging a breach through internal procedures, negotiation, or legal action.

What Constitutes a Breach of Employment Contract

A breach occurs when one party fails to perform their contractual obligations without lawful justification. Employment contracts typically include:

• Express terms (written or verbally agreed terms)
• Implied terms (such as mutual trust and confidence)
• Statutory terms (minimum legal rights)

Common examples of employer breaches include:

• Failure to pay wages or salary on time
• Unlawful deduction from wages
• Unilateral changes to working hours, duties, or pay
• Failure to provide contractual notice or pay in lieu of notice
• Breach of disciplinary or grievance procedures
• Failure to provide safe working conditions

Employee breaches may include:

• Failure to follow contractual duties
• Breach of confidentiality
• Refusal to carry out lawful instructions

Legal Framework Governing Employment Contract Disputes

Employment contract disputes are governed by:

• Common law of contract
• Employment Rights Act 1996
• Case law on implied duties (including mutual trust and confidence)
• Statutory protections against unfair dismissal and unlawful deductions

Claims may be brought in:

• Employment Tribunal (for statutory claims such as unlawful deductions, unfair dismissal, or breach linked to statutory rights)
• Civil courts (for pure contractual disputes exceeding tribunal jurisdiction limits)

Employment tribunals generally deal with contract claims only where they arise or are outstanding at termination of employment, subject to statutory limits.

Step-by-Step: How to Challenge a Breach of Employment Contract

1. Identify the Exact Breach

The first step is to clearly identify:

• Which term of the contract has been breached
• When the breach occurred
• Whether it is ongoing or a one-off event

Supporting documents may include:

• Employment contract
• Payslips or payroll records
• Written policies incorporated into the contract
• Emails or written instructions

A clear definition of the breach is essential before escalation.

2. Raise the Issue Informally

Most employment disputes begin with informal resolution. This may involve:

• Speaking to a line manager
• Contacting HR or payroll
• Requesting clarification of contractual terms

Many breaches arise from administrative error and can be corrected quickly at this stage.

3. Submit a Formal Grievance

If informal resolution is unsuccessful, a formal grievance can be submitted under the employer's grievance procedure.

A grievance should include:

• A clear description of the breach
• Relevant contractual terms
• Dates and supporting evidence
• The outcome being requested (for example, payment, reinstatement of terms, or correction of records)

Employers are expected to investigate grievances reasonably under the Acas Code of Practice on disciplinary and grievance procedures. Failure to follow the Code may affect tribunal outcomes.

4. Consider Without Prejudice Negotiation

Where appropriate, parties may engage in “without prejudice” discussions to settle the dispute.

This may result in:

• Compensation payment
• Agreed termination of employment (settlement agreement)
• Restoration of contractual terms
• Agreed exit terms

Settlement agreements are legally binding if properly drafted and include independent legal advice.

5. Use ACAS Early Conciliation

Before issuing most tribunal claims, it is mandatory to contact Acas for early conciliation.

This process:

• Is required for employment tribunal claims
• Temporarily pauses limitation periods
• Allows for settlement discussions without formal proceedings

If no resolution is reached, Acas issues a certificate enabling a tribunal claim.

6. Bring an Employment Tribunal Claim

Where statutory rights are involved (such as unlawful deductions, constructive dismissal, or breach linked to dismissal), a claim may be submitted to an employment tribunal using form ET1.

Common claims related to breach of contract include:

• Unlawful deduction from wages
• Constructive unfair dismissal (resignation due to serious breach)
• Breach of contract linked to dismissal

Tribunals can award:

• Compensation for financial loss
• Outstanding wages or benefits
• Interest in some cases

7. Civil Court Claims for Contract Breach

If the claim is purely contractual and does not fall within tribunal jurisdiction, it may be pursued in the civil courts.

This typically applies where:

• The employment relationship has ended
• The claim exceeds tribunal contractual limits
• The dispute involves complex contractual interpretation

Civil claims may result in damages for breach of contract.

Constructive Dismissal and Serious Breaches

In serious cases, a breach may entitle the employee to resign and claim constructive dismissal.

This occurs where:

• The employer commits a fundamental breach of contract
• The employee resigns in response to that breach
• The resignation is not delayed excessively

Examples include:

• Persistent non-payment of wages
• Severe workplace hostility or bullying
• Unilateral demotion or pay reduction

Constructive dismissal claims are complex and fact-sensitive, often requiring detailed tribunal assessment.

Time Limits for Claims

Time limits depend on the type of claim:

• Employment Tribunal claims: usually 3 months minus 1 day from the breach or termination
• Breach of contract claims in civil courts: generally 6 years

ACAS early conciliation pauses the tribunal limitation period.

Missing time limits can prevent a claim from being heard, regardless of merit.

Evidence in Breach of Contract Cases

Strong evidence is essential and may include:

• Written contract and amendments
• Payslips and bank statements
• Emails or HR correspondence
• Witness statements
• Company policies incorporated into contracts

Tribunals assess whether contractual terms were clearly breached and whether losses resulted directly from the breach.

Common Defences by Employers

Employers may argue:

• No breach occurred
• The employee agreed to the change
• The contract allowed variation of terms
• The claim is out of time
• The breach was minor and did not justify resignation (in constructive dismissal cases)

Each defence is assessed based on contractual wording and factual evidence.

Risks and Practical Considerations

1. Relationship Breakdown

Challenging a breach may affect ongoing working relationships.

2. Constructive Dismissal Risk

Resignation must be carefully considered, as it may limit available claims if not justified.

3. Evidence Requirements

Tribunals rely heavily on documentation and consistency of account.

4. Cost and Time

Civil court claims may involve higher procedural complexity and potential cost exposure.

Common Questions from our Readers

Can I refuse to work after a breach?

Not automatically. Refusal may itself be treated as misconduct unless legally justified.

Can a verbal agreement override a written contract?

In some cases yes, but written terms usually carry stronger evidential weight.

Do I need to resign to bring a claim?

No. Many breach of contract claims can be brought while still employed.

Can compensation be claimed for stress?

Generally, compensation focuses on financial loss rather than general distress, except in specific discrimination-related claims.

Key Takeaways

A breach of employment contract occurs when contractual obligations are not met by either party. Employees can respond by identifying the breach, raising it internally, submitting a grievance, and pursuing formal resolution through Acas, tribunal proceedings, or civil courts.

Key points:

• Employment contracts are legally binding agreements
• Remedies depend on the nature and seriousness of the breach
• ACAS early conciliation is usually required before tribunal claims
• Strict time limits apply to tribunal and court proceedings
• Constructive dismissal may arise from serious breaches

Understanding the legal framework and procedural steps is essential to effectively challenge breaches and protect contractual rights.