Key Takeaways:

  • Employees and employers can both sue for breach of contract if agreed-upon terms are violated.
  • Damages typically include lost wages, benefits, and other compensation outlined in the contract.
  • At-will employees generally cannot sue for breach of contract unless specific conditions apply.
  • Employers may sue employees for failure to provide required notice or violating non-compete clauses.
  • Legal remedies can involve mediation, arbitration, or litigation, with specific damages like liquidated damages or expectation damages.
  • Seeking legal counsel can help determine the best course of action when pursuing a breach of contract claim.

Suing for breach of contract employment is a legal remedy with expected damages.

How Are Damages Calculated?

If an employer wrongfully terminates an employee, the employee may be entitled to compensation for lost wages. Since the employee anticipated earning a certain income, they may pursue legal action to recover these expected damages.

However, if the employee breaches the contract, the employer may also seek damages for losses incurred. For instance, if the employee had to give a 30-day notice as written in the contract, but the employee didn't do this, the employer can sue for damages. The damages are typically calculated based on the cost of recruiting and training a replacement.

Types of Damages in a Breach of Employment Contract Case

When an employer breaches an employment contract, the employee may be entitled to different types of damages, including:

  • Expectation Damages – Compensation that places the employee in the position they would have been if the contract had been fulfilled (e.g., unpaid salary, benefits, or bonuses).
  • Compensatory Damages – Reimbursement for financial losses incurred due to the breach, such as relocation costs or lost benefits.
  • Liquidated Damages – If the contract includes a pre-agreed sum to be paid in case of a breach, the employee can claim this amount.
  • Punitive Damages – These are rare in contract cases but may apply if the breach was particularly egregious, such as fraud or bad faith dealings.
  • Attorney’s Fees and Court Costs – If the contract includes a provision stating the employer will cover legal costs, these can be recovered as well.

Employees should attempt to mitigate their losses by seeking alternative employment, as courts may reduce damages if they fail to do so.

Limits to a Recovery

There are some limitations that can reduce the damages received or disqualify a case that was brought for breach of contract.:

  • At-will employees may be let go without reason, as long as it's not unlawful.
  • Foreseeable damages are the case when the employer has to find a new employee and the employee a new job because of a breach of contract.
  • Certainty is when verifiable damages can be proved and obvious.
  • Both the employee and employer have to lessen damages by finding a job and hiring a new person respectively.

Some employment contracts do not change the at-will relationship between employee and employer. As an example, an employer sends an email to a prospective employee that mentions the start date, salary, job description, and that the employment is at-will.

If there's an acceptance by the employee, then an at-will relationship is created. Both parties have the right to end the contract. If you have a business, it's best to contact a legal professional for any breach of employment contract issue to advise on the right course.

Exceptions to Breach of Contract Claims

Not all breaches of contract lead to a successful lawsuit. Some key exceptions include:

  • At-Will Employment Clauses – If the contract explicitly states that employment is at-will, the employer can terminate employment without cause, unless they violate other contractual terms.
  • Force Majeure Events – Certain contracts have clauses that excuse performance under extraordinary circumstances, such as natural disasters or pandemics.
  • Waiver of Claims – Some contracts require employees to waive their right to sue for breach of contract, though these waivers may not always be enforceable.
  • Failure to Prove Losses – Employees must provide evidence of financial losses, such as pay stubs, benefits statements, or a job offer letter, to claim damages.

What Is a Breach of Contract?

A company usually creates a breach of the employment contract to keep the rights of employers and employees. Both are responsible to uphold the contract's rules and maintain it. The contract has to be signed before the person begins working.

Employment contracts establish a written relationship between the employer and employee. If any of the rules in the contract are not followed, this is considered a breach of the contract. The problem comes about when there is a breach but it was not written in the contract, which makes it harder to prove. It's advisable to go over every term in the contract with your employer.

Common Types of Employment Contract Breaches

Employment contract breaches can take various forms, including:

  1. Unjust Termination – An employer fires an employee before the contract's term ends without valid cause.
  2. Unpaid Compensation – The employer fails to pay wages, bonuses, or agreed benefits.
  3. Violation of Non-Compete or Confidentiality Agreements – If an employee shares proprietary information with a competitor, it could be a breach of contract.
  4. Failure to Provide Job Duties or Support – If an employer fails to uphold promises regarding job responsibilities, equipment, or work environment, it may constitute a breach.
  5. Unilateral Contract Modifications – If an employer changes compensation or job roles without employee consent, it could lead to a lawsuit.

Employees and employers should review their contracts carefully to determine if a breach has occurred.

What if an Employer Breaches Contract?

Most employees do not understand their contract terms because they don't take the time to read the contract in detail. If you feel your employer has breached the contract, read the contract terms and make sure this is true. If there are legal terms you don't understand, make sure to find a legal professional to help. You can first talk it over with your employer. If talking it over doesn't work, you can mediate through an agency, and if this doesn't work, you might have to head to court.

Common breaches of a contract include:

  • Non-payment of travel expenses, wages, or holiday or sick pay.
  • Non-payment during notice time, which is the period before leaving the job.
  • Changes to the contract that you weren't aware of and didn't sign for.

Remember that the initial job description, payslips, and staff handbook also help provide evidence in case there is a contract breach.

Steps to Take When Your Employer Breaches a Contract

If you believe your employer has breached your contract, take the following steps:

  1. Review Your Contract – Carefully analyze the contract terms to confirm a breach has occurred.
  2. Document the Breach – Collect evidence such as emails, pay stubs, or any communication proving non-compliance.
  3. Communicate with Your Employer – Address the issue with your employer first to see if it can be resolved without legal action.
  4. Seek Mediation or Arbitration – Many employment contracts require disputes to go through mediation or arbitration before heading to court.
  5. File a Lawsuit – If all else fails, an attorney can help you pursue legal action for breach of contract.

Legal professionals can assess the claim and determine the best course of action for recovering damages.

Suing for Not Providing Notice Before Resignation

Employees who don't provide a notice weeks before signing may be sued for breach of contract by the company. If an employee doesn't do this, the company can suffer while trying to search for someone to replace the employee. Suing an employee may lead to legal actions where the employee would have to pay what is set by the lawyers or company. Mostly, the company doesn't want to head to court as it can lead to bad publicity.

If this employee then starts working for a competitor, the employer can sue for breach of contract. Those employees hired for high positions are likely to have a contract where they cannot work with a competitor should they leave the current company. A breach of contract is a heavy burden for both the employee and employer, as it can lead to a hard time for the current and former firm.

Employer Remedies for Employee Breach of Contract

Employers can also take legal action if employees breach their contracts. Some common scenarios where an employer may sue include:

  • Failure to Provide Required Notice – If an employee quits without providing the contractually required notice, the employer may seek compensation for hiring and training costs.
  • Violation of Non-Compete Agreements – Employees who work for a competitor in violation of a signed agreement may be sued for damages.
  • Misappropriation of Trade Secrets – If an employee shares confidential company information, the employer may seek an injunction or financial damages.
  • Failure to Return Company Property – Employees who do not return equipment, documents, or assets may face legal action.

Employers must prove financial harm resulted from the breach to successfully claim damages.

Frequently Asked Questions

  1. Can I sue my employer for breach of contract if I am an at-will employee?
    • Generally, at-will employees cannot sue for breach of contract unless their employer violated a specific written agreement regarding pay, benefits, or job security.
  2. What happens if my employer doesn’t pay me according to the contract?
    • You may be entitled to unpaid wages, benefits, and possibly interest on overdue payments. Legal action can help recover the owed compensation.
  3. Can an employer change the terms of my contract without my consent?
    • No, unilateral changes to an employment contract without mutual agreement may be considered a breach of contract.
  4. What should I do before suing my employer for breach of contract?
    • Review your contract, gather evidence, attempt communication with your employer, and seek legal advice before filing a lawsuit.
  5. Can I sue my employer for emotional distress due to a contract breach?
    • Generally, breach of contract claims do not include emotional distress damages unless the contract explicitly allows for them.

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