An employment contract is a legally bind agreement between two parties and contains both explicit and implicit terms.
Express terms include salary pay and work location. Implied terms refer to what should be included as part of an employment contract, such as duty of care and equal treatment.
The breach of employment contract can have severe repercussions for employees and they can seek financial damages in court.
The Impact on the Employer
Under certain circumstances, contract breaches can result in considerable financial losses for employers. If an employee accepts employment with a competitor before his or her contract end date or discloses confidential information outside the workplace without authorization, their employer could be held liable for breach of contract and claim damages or injunctive relief as appropriate.
In cases where employees breach one or more terms of their employment contract while still employed with the company (for instance a breach of an express or implied covenant not to compete), courts may order the employer to pay any losses caused to the employee as compensation; this process is known as specific performance. Courts tend to favor specific performance only where it would result in continuing contract obligations – for instance when leaving their job without notice or joining a competitor without express post-termination restrictions in place.
Companies should keep meticulous records of contracts, amendments, performance evaluations, and disciplinary actions so they can avoid unintended breach incidents and reduce legal actions. Employers may wish to implement alternative dispute resolution and mediation processes consistent with their employment agreements in order to reduce legal intervention while improving employee engagement.
The Impact on the Employee
Contract breach incidents can have serious repercussions for employees, such as missing their promised salary or having to return any benefits not included in their agreement – known as compensatory damages.
When contracts are breached, employees can seek damages to cover any financial losses from said breach, such as missed earnings, bonuses, demotions and failure to promote. They may also seek reimbursement for hiring temporary replacements and finishing their contracts as agreed.
employees also have a duty to mitigate their losses caused by breaches of contract by finding another job and seeking out liquidated damages – an amount set out in their contract that employers must pay them if found breaking it.
Low morale among contract workers can be an enormously serious problem that leads to various other difficulties. They must list previous employment on almost every job application they submit and may incur reputational damage if companies that violated their contracts fire them for no apparent reason, often without notice or warning.
The Impact on the Company
Employers should carefully consider the effects that breaches of contract will have on their company, even when those breaches may seem minor; even minor ones could potentially cost business opportunities to your competitor.
If an employee breaches their employment contract, there are various steps you can take to address the matter. Depending on the nature of the breach, internal solutions or third-party assistance may suffice; otherwise alternative dispute resolution methods like arbitration or mediation might provide better solutions.
Importantly, if a material breach occurs, damages may be payable. Expectation damages cover what would have been your earnings had the contract been upheld – such as sign on bonuses, relocation expenses, training fees or licensure costs.
If you find yourself experiencing a breach of contract, it is crucial that immediate steps be taken. Reaching out to a law firm specializing in employment issues like Console Mattiacci Law LLC will allow you to explore your legal options and ensure the best interests of you and your company are taken into consideration.
