Navigating employment laws in the UK can be tricky, whether you're an employer trying to run a business or an employee just looking for fair treatment. At the very core of each working relationship is the employment contract - the legal document that spells out everyone's main duties and what each side can expect from the other. The idea is to set things up so that both the business and the worker can thrive.
However, just having a formal contract in place doesn't guarantee smooth sailing. Miscommunications happen and people can still lose sight of what they initially agreed to. The truth is, working relationships get complicated, even when you've already laid out the terms upfront.
From time to time, these workplace complications go beyond minor misunderstandings and become contractual breaches - whether on purpose or entirely accidental. In these situations, trust and goodwill erode quickly, and both parties need to know what their potential next moves are.
In this guide, we will first examine what makes employment contracts valid in the UK, then look at some of the ways contracts are typically broken. Finally, we will finish with a few tips on how to resolve any conflicts that you may be facing (whether you’re the hiring company, or the employee).
For an employment contract to be considered a legally binding agreement in the UK, these five key elements must be present:
When all five elements are present, a legally valid (and binding) employment contract forms under UK law. Both the employer and employee must then fulfil the duties and promises made in the signed contract.
A breach of contract occurs when one party fails to live up to their terms, as defined in the contract. This can include an alleged breach, where the nature and extent of the breach are disputed. Some common breaches by employers, also known as employer breaches, include:
On the employee side, examples of an employee breach could be:
Essentially, if either party reneges on major commitments made in the contract, that may constitute a breach of legal terms.
When an employment contract is breached, it typically involves failure to adhere to agreed terms, breaking contract terms, or withdrawing job offers before the start date.
Breaches of a valid UK employment contract fall into one of two categories: actual breaches and anticipatory breaches:
An actual breach occurs when either the employer or employee does not meet a contractual obligation or promise that is already due under the terms of the contract.
For example, an employer does not pay an employee’s agreed-upon salary or scheduled pay raise. In such cases, the affected party may consider making a contract claim for the breach.
On the other hand, an anticipatory breach occurs when one party clearly indicates (through words or actions) that they do not plan to complete some promised obligation in the future.
For instance, a company informs a salesperson that they will no longer receive commissions for securing new clients. Even though the contract clearly promises a sizable commission, the employer makes it clear they don’t plan to pay them.
This is a clear example of how simply stating that a contract agreement will not be honoured is, in fact, a breach. In such cases, the affected party may consider making a breach of contract claim for the anticipatory breach.
Under UK contract law, breaches are categorised as either minor/partial or fundamental/repudiatory depending on the severity and impact of the contractual violation:
A fundamental breach can lead to serious consequences, including wrongful dismissal if the breach forces an employee to resign or if the employer fails to provide the correct notice period or pay.
A minor breach happens when one party fails to do what was promised in the contract, but just to a small degree. The overall reason for the employment relationship is still intact, and work can continue.
For example, let’s say an employee shows up 30 minutes late for work twice in a week. Is this frustrating for the manager? Yes, of course. However, it likely doesn't sabotage their overarching job duties or company operations.
A minor breach like this typically wouldn’t generally allow the employer to immediately fire someone. But the company might formally warn the employee or require them to use personal time to cover the delays in the future.
A fundamental breach refers to a severe violation of the contract. In other words, someone has completely failed on one (or more) of the central terms, resulting in a drastic change to the value one side was reasonably expecting.
For example, say an employer suddenly stops paying an employee’s salary for no valid reason. This completely undermines their ability to do their job and means they can no longer pay their bills on time. Similarly, if an employee breaches their contract by secretly handing over sensitive company data to a competitor that is protected by legal agreements, this exposes the employer to significant risks/consequences, such as the loss of IP, customer churn, and the deterioration of workplace trust.
Serious violations like this may entitle the innocent party to seek damages more aggressively.
Determining whether an alleged breach qualifies as minor or fundamental depends on several criteria:
| Minor Breach | Fundamental Breach | |
| Severity | Less serious | Very serious |
| Impact | Does not usually allow termination, but damages can be claimed | Allows termination and damages can be claimed |
| Remedies | Damages | Damages and termination |
| Examples | Late delivery, minor defects | Non-delivery, complete abandonment of obligations, etc. |
If either the employer or employee feels that there has been a fundamental breach, UK law offers a few remedies. Claims for breach of contract can be brought before the civil courts when seeking damages for financial losses resulting from the breach. These are:
An employment tribunal can also be approached for resolving disputes related to breaches of employment contracts. The tribunal can award financial compensation, subject to a maximum limit, depending on the circumstances of the case. Additionally, employees have the option of making an employment tribunal claim if their employer breaches the contract.
The most common legal remedy is claiming for damages. These are meant to compensate the innocent party to help offset any losses suffered from the contractual breach. Types of damages include:
Sometimes, just getting repaid isn't enough. For example, say an employer won't give an earned promotion - money alone doesn't fix that. So courts can order them to deliver the actual promised promotion itself.
Courts can also issue injunctions, legally preventing more damage. For instance, an injunction can block an employer from improperly firing someone or barring an employee from stealing company secrets. This prevents repeating or ongoing violations.
When there's disagreement over what a contract truly means, a court declaration gives official clarity on who is responsible for certain duties and responsibilities moving forward.
Do You Manage a Global Team?
If your company has teams in the UK but isn’t physically situated there, ensuring employment contract compliance across borders can give any HR manager a headache. As an Employer of Record service designed for global workforces, Boundless specialises in absorbing those legal paperwork and compliance burdens for you. We craft compliant employment contracts tailored specifically to each country's local labour laws - dual language if needed. This is just a small part of the fully compliant employment solution that we offer in dozens of countries, including the UK. This allows you to focus on doing what you do best while we handle the legal side of employment. If you’d like to learn more, get in touch today.
If either an employer or employee believes the other party has potentially breached their mutual employment contract, there are a few key actions to take:
Additionally, consider the possibility of making contract claims, especially in cases of breach of employment contracts, which can be pursued in the Employment Tribunal for remedies and compensation.
As always, prevention is the best course of action, before an actual situation has occurred. There are simple, proactive steps both employers and employees can take to minimise the risk of problems arising throughout the duration of their employment contract.
UK employment laws can be tricky to navigate, for both employers and employees alike. As such, knowing your rights and responsibilities can help you navigate potential conflicts - whether you're an employer trying to protect your business or an employee safeguarding your rights.
Remember that clear contracts and open communication go a long way to preventing issues. But when disagreements do happen, knowing your options is crucial. Document thoroughly, seek legal guidance, and explore peaceful solutions before escalating to formal grievances or legal action.
For employers based abroad with teams on the ground in the UK, keeping contracts compliant across is no simple task. But you don’t have to figure everything out alone.
As a leading Employer of Record service (EOR), Boundless specialises in staying on top of employment regulations across multiple countries, including the UK.
Intricate legal paperwork and compliance support for the numerous challenges that come with international hiring and contract management are exactly what we handle on our customers’ behalf.
If you’d like to learn more, get in touch today.
