A contract of employment is a legal agreement which comes into being when an employee agrees to work for an employer in return for pay.

The terms of a contract are the rights and obligations which bind the parties to the agreement and come in two forms – express and implied.

Express terms are those which are expressed orally or actually written into the contract. Employers are legally obliged to put certain express terms in writing in the form of a ‘written statement of particulars.’ These include details such as job title, rate of pay, holiday entitlement and pension schemes.

Implied terms refers to those that are too obvious to mention or those which both parties would assume to be incorporated into the contract. This includes statutory rights such as equal pay, minimum wage, sick pay and freedom from discrimination on the grounds of sex, race or disability.

Some terms may be implied through accepted custom and practice in a particular profession or with a particular employer. There is also an implied mutual trust and confidence on behalf of the employer and employee.

If an employer or employee breaks either the express or implied terms of a contract of employment or any other contract connected with employment then a breach of contract occurs.

Breach of contract claims by employees

If an employee suffers a measurable financial loss because their employer breaches the contract of employment or any other contract connected with employment, the employee may be entitled to seek damages by making a claim for breach of contract.

Such claims are normally made in a civil court although a claim can be made to an employment tribunal if the following occurs:

Employment tribunal claims must be made within three months of the date the job ended. Civil court claims can be made up to six years from the date on which the alleged breach of contract occurred.

The amount a tribunal can award for breach of contract is subject to an upper limit which at the time of writing (June 2003) is £25,000 but civil court awards can reflect the full amount of damages suffered by the dismissed employee.

Breach of contract claims by employers

If an employer suffers a measurable financial loss because an employee breaches the contract of employment or any other contract connected with employment, then the employer may be entitled to seek damages by making a claim for breach of contract.

Such claims are also usually made in a civil court. An employer can only make a claim in an employment tribunal if:

Employment tribunal claims by an employer must normally be made within six weeks of the date on which the employer receives from the tribunal a copy of the dismissed employee’s originating application. Claims to civil courts may be made within six years from the date the alleged breach of contract occurred.

The amount a tribunal can award for breach of contract is subject to an upper limit which at the time of writing (June 2003) is £25,000 but civil court awards can reflect the full amount of damages suffered by the employer.