What is an Employment Contract Breach?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 March 2020
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Also known as an employment breach of contract, an employment contract breach is a situation in which either an employer or an employee has failed to comply with the provisions found in the employment contract that governs the relationship between the two parties. In many nations, this applies to both implied and expressed provisions of the contract, making it necessary for both parties to abide by the terms of the agreement as well as any governmental regulations that may apply to employment in that country. Should either party fail to abide by the terms of the contract, the other party has the right to terminate the agreement, and may have the legal ability to seek redress in some form.


As in other situations involving violation of contracts, an employment contract breach typically comes about because one or both parties have not lived up to the covenants made in the contract. An employee may fail to observe the confidentiality clause of the agreement and reveal proprietary information to a competitor, or possibly fail to perform the assigned duties outlined in the contract terms. An employer may fail to provide benefits or other incentives to the employee within the time frame specified, or create a hostile work environment that makes completing tasks extremely difficult. Since both parties hold the other accountable for fulfilling the terms of the agreement, each party has the ability to legally terminate the relationship if the other party refuses to comply with the provisions of the employment agreement.

An employment contract breach can take place in just about any employment situation. Both union and non-union employees may be involved in a breach of contract. In like manner, an employment contract breach may occur in an employment at will jurisdiction as well as a right to work jurisdiction. Employers of all types are responsible for complying with any governmental standards that apply to the treatment of employees, even if there is not a specific employment contract between the two parties.

In the event that an employer or an employee chooses to not honor the terms of the employment agreement, the offended party has the right to take actions that are likely to be upheld in a court of law. For example, if the employer fails to provide the promised sign on bonus or does not deliver on incentives specifically provided for in the contract, the employee may sue for those benefits. In like manner, if an employee fails to perform tasks spelled out in the provisions of the contract, the employer has the right to end the relationship. Should the employee share confidential information on product lines or development, or some other type of proprietary knowledge, the employer may have grounds to sue for damages. It is not unusual for both parties to negotiate some type of settlement terms when an employment contract breach occurs, rather than deal with what could be a lengthy process in the court system.


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Post 2

I've heard that employment contract breaches can go both ways, but I've rarely heard of an employee successfully suing a company for it. I think proper compensation for the work performed would be an example of a contract employment breach. If the company fails to pay the employee everything that is owed, then it would be in breach of contract, too.

Post 1

Living in a "right to work" state, I don't see a lot of employment contracts like the ones described in this article. The closest thing I've experienced is a 90 probationary period. During the first 90 days of employment, an employer can fire a new hire for any reason at all. Most employers use that time to evaluate the new employee, however, not to find reasons to terminate him or her.

I've seen these breach of contract cases more often in upper management and skilled labor positions. These employees or managers were hired for their specific skillsets, and it makes sense for companies to spell out exactly what's expected of them in a legal contract. If I were the CEO of a company, I would want the ability to fire an underproducing salesman for his lack of effort.

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