This guide is maintained as a current resource for July 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to employment law remedies for breach of contract in England and Wales, explaining damages, wrongful dismissal claims, tribunal and civil court processes, time limits, and practical considerations for employees and employers.
A contract of employment creates legal rights and duties for both employer and employee. When one party fails to honour those obligations, this constitutes a breach of contract. In the context of work, breaches can include failing to pay wages, not giving contractual notice, withholding contractual benefits, or unilaterally altering terms without consent.
Employment law in England and Wales offers a range of legal remedies aimed at compensating the injured party or enforcing contractual terms. This article explains those remedies, the processes for pursuing them, time limits, and practical considerations for employees and employers.
What Is a Breach of Contract in Employment?
A breach of contract occurs when one party fails to fulfil a term of the employment agreement, whether express (written or verbal) or implied (such as the duty of mutual trust and confidence). Both employers and employees can breach contracts. Common examples include:
- Employer fails to pay agreed wages, bonuses, pension contributions, or holiday pay.
- Employer dismisses an employee without giving the contractual notice required.
- Employee resigns without providing notice or breaches restrictive covenants after leaving.
- Employer changes contractual terms unilaterally without consent.
Before pursuing legal remedies, many disputes can be resolved informally, through grievance procedures, or by negotiation.
Legal Remedies After a Breach
Compensation (Damages)
Damages are the most common remedy for a breach of employment contract. They are financial awards intended to put the innocent party in the position they would have been in had the contract been performed. In employment disputes, damages typically cover:
- Unpaid wages or salary.
- Loss of bonuses or commission that were contractually due.
- Pay for unused holiday entitlement.
- Notice pay if the employer failed to give contractual notice.
A successful claim for breach of contract through an Employment Tribunal is capped at £25,000; if compensation sought exceeds this limit, the injured party should bring the claim in the civil courts (County Court or High Court).
Unlike unfair dismissal, there is no minimum period of service needed to bring a breach of contract claim. You may bring a claim even during ongoing employment, though tribunals generally hear claims after employment ends.
Wrongful Dismissal
A specific form of breach occurs when an employer terminates employment without complying with the contractual notice provisions. This is known as wrongful dismissal. In wrongful dismissal cases, the key remedy is also damages to cover the pay and benefits that would have been received during the notice period.
Damages for wrongful dismissal may include pay in lieu of notice, lost bonuses, or contractual benefits and are usually assessed on a contractual basis rather than a statutory one. While tribunals can hear wrongful dismissal claims, they are subject to the same £25,000 cap. High-value wrongful dismissal claims are usually pursued in the civil courts.
Civil Court Remedies
When the amount of compensation sought exceeds the tribunal cap or the claim involves complex contractual rights, an individual may pursue the matter in the civil courts (County Court or High Court). These courts can award damages without the tribunal's financial limits and, in rare cases, could consider other remedies outside the tribunal's jurisdiction.
Injunctions and Equitable Remedies
In general contract law, remedies such as injunctions (court orders restraining or compelling action) and specific performance (ordering a party to perform contractual obligations) are available. However, in employment settings:
- A court will not order specific performance of a contract of personal service because it would compel parties to work together.
- An injunction may be used in the civil courts in limited circumstances, for example to prevent breach of restrictive covenants (such as confidentiality or non‑compete clauses) after employment ends.
These equitable remedies are discretionary and rare, and generally unavailable in tribunals.
Settlement Agreements
A settlement agreement is a negotiated, written contract that ends a dispute and sets out agreed terms, which may include a financial payment, a reference, or confidentiality undertakings. They are often used to resolve employment disputes, including breaches of contract, without going to tribunal or court.
Settlement agreements must be voluntary, in writing, and accompanied by advice from an independent adviser for the employee.
Employment Tribunal Procedures and Time Limits
To bring a claim to an Employment Tribunal for breach of contract, you must first notify ACAS and usually engage in early conciliation through them. If conciliation does not resolve the issue, a tribunal claim form (ET1) is submitted.
Time limits are strict:
- Most tribunal claims (including breach of contract and unlawful deduction of wages) must be submitted within three months minus one day from the date of the breach or last underpayment.
Claims in the civil courts generally have a limitation period of six years from the date of breach under the Limitation Act 1980, offering a longer window when tribunal time limits are missed.
Practical Considerations
Mitigation
In breach of contract claims, the claimant must mitigate losses by taking reasonable steps to reduce financial damage (for example, seeking alternative employment if dismissed without notice).
Evidence
Successful claims require evidence of the contract terms, the breach, and resulting losses. Relevant documentation includes contracts, payslips, correspondence, and records of attempts to resolve the issue.
Counterclaims
An employer may counterclaim, for example if it believes the employee owes money or has caused loss due to their own breach. This can affect net compensation.
Final Thoughts
Employment contracts create enforceable rights and duties. When breached, legal remedies exist to compensate the injured party and address losses. The primary remedy for breach of an employment contract is financial compensation (damages), whether pursued through an Employment Tribunal (with an award cap) or the civil courts (without a cap). Claims can include unpaid wages, notice pay, and other contractual entitlements.
While other remedies such as equitable orders are generally unavailable in employment tribunals, they may be available in the civil courts in limited circumstances. Settlement agreements are a practical alternative to litigation. Compliance with time limits and procedural requirements is critical to preserving legal rights.
Understanding these remedies and processes helps employees and employers navigate contract disputes and make informed decisions about dispute resolution.
