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The Grievance Survival ToolkitBreach of contract: a guide to your rights
Your employment contract is legally binding. When your employer fails to honour its terms, you may have the right to recover your losses.
Your employment contract is a legally binding agreement between you and your employer. When either party fails to honour its terms, it is known as a "breach of contract." While minor issues can often be resolved informally, a serious breach can give you the right to take legal action to recover any financial losses you have suffered.
This guide explains what constitutes a breach of contract in the workplace, the most common types of claim, and the legal processes involved.
1. What is a breach of contract?
A breach of contract occurs when your employer fails to do something they are required to do under your contract, or does something they are not allowed to do. The terms of your contract are not just what is written down; they also include terms that are verbally agreed, or are "implied" by law.
- Express terms: these are the terms that are explicitly written in your contract document, such as your rate of pay, job title, and notice period.
- Implied terms: these are terms that are not written down but are considered to be part of the contract by law. The most important is the implied term of mutual trust and confidence, which means your employer must not act in a way that is likely to destroy or seriously damage your working relationship.
2. Common types of breach of contract claims
While many issues can be a breach of contract, some are more common than others.
The most frequent claim
Failure to pay notice pay (wrongful dismissal)
What it is: if your employer dismisses you without giving you the full notice period set out in your contract (or the statutory minimum, if longer), this is a breach of contract known as wrongful dismissal.
Example: your contract states you are entitled to three months' notice, but your employer dismisses you with immediate effect and only pays you one week's notice. You can claim for the remaining unpaid notice period as a debt.
Wages
Unlawful deductions from wages
What it is: your employer makes a deduction from your pay that is not authorised by law or by a specific clause in your contract.
Example: your employer deducts money from your final salary for alleged damage to company property, but your contract does not give them the right to do so.
Bonuses
Failure to pay a contractual bonus
What it is: your contract states you are entitled to a specific bonus if you meet certain targets, but your employer refuses to pay it even though you have met the conditions.
Important note: if your bonus is described as "discretionary," it is much harder to claim, but the employer must still exercise their discretion rationally and in good faith.
Changing the contract
Unilateral change to your terms and conditions
What it is: your employer changes a fundamental part of your contract without your agreement, for example by cutting your pay or changing your place of work.
Important note: this can also be grounds for a constructive dismissal claim.
3. The legal process: Employment Tribunal vs County Court
You can bring a breach of contract claim in either the Employment Tribunal or the County Court, but there are important differences.
| The Employment Tribunal (ET) | The County Court (or High Court) | |
|---|---|---|
| When to use it | You can only bring a breach of contract claim in the ET if your employment has ended. The ET is usually quicker and less formal. | You must use the County Court if your claim is for more than £25,000. You can also use it if you are still employed. |
| Claim limit | The maximum award for a breach of contract claim is £25,000. | There is no upper limit on the value of a claim. |
| Costs | Each side usually pays their own legal costs, regardless of who wins. | The biggest risk: the losing party is usually ordered to pay a significant portion of the winning party's legal costs. |
What to do next
If your employer has breached your contract, act
Raise a formal complaint
A written grievance forces your employer to respond on the record and creates the evidence base for any later claim.
The Letter & Grievance BuilderConsidering a claim?
Time limits are strict — usually three months minus one day in the tribunal. Understand the full process first.
The Employment Tribunal Preparation Toolkit