HR Expert: How can a breach of contract be avoided?
After facing a rather expensive tribunal claim for unlawful deduction of wages, my client has become concerned about their employment contracts, and wants to do everything they can to avoid breaching them in the future. I would like to offer them some practical tips to do this, can you please help?

A breach of contract is a serious matter, as your client has unfortunately found out, and can lead to damaged employee relations and tribunal (and even civil court) claims that are costly and time consuming. There are however ways your client can ensure this does not happen again.

  1. Is the contract clear?

Uncertainty over contractual terms is bound to at some point to lead to a dispute, and the potential for a breach of contract. It is therefore important that your client reviews their contract with their employees, and clarifies anything that is unclear.

  1. Is there a deductions clause?

One area that can catch employers out is that of deductions. There are specific rules about what can be taken away from an employee’s salary, and when, and it is essential these are followed in order to avoid a breach of contract and unlawful deduction of wages claim. There are some deductions that can be made, such as those required by the law (for example where an attachment of earnings has been ordered), or where the contract includes a specific term allowing for it. This can arise where an employee leaves partway through an annual leave year, and has taken more holiday than they have accrued. It is only possible to deduct the overtaken amount where a specific deductions clause is in the contract.

  1. Are the employment procedures contractual?

Another way your client might fall foul of the contract is if there are contractual procedures contained within it, such as a disciplinary procedure or a redundancy process. If these are found within the contract of employment, or are marked as ‘contractually binding’, failure to adhere to them would be a breach of contract. The significance of this is that a claim for a breach of contract can be brought at any point once the employment contract has been formed, even before the actual employment has started, and certainly before two years of employment.

  1. Have any terms been implied?

Under general legal principles, it is not necessary for a contract to be written to be formed (in employment law, certain terms must be found in a statement of main terms, as specified under section 1 of the Employment Rights Act 1996). As a result of this, it is possible for unwritten terms to become implied into a contract, even where that contract has been written down. This can include terms implied by statue, such as equal pay between sexes, those implied by the common law, such as the duty of trust and confidence owed by both parties, and finally it is possible to imply terms through custom and practice, when something is done so often without change it becomes implied it always will be, such as always paying generous redundancy payments.

 


 

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