Breach of employment contract

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Breach of employment contract

An employment contract generally defines the relationship between employer and employee. However, employment contracts are different to other types of contracts as they are supported and regulated by national legislation that outlines a worker’s minimum entitlements. These entitlements are referred to as the National Employment Standards (NES) and are contained in Part 2-2 of the Fair Work Act 2009 (Cth) (the Act).1

A breach of employment contract or wrongful dismissal typically occurs when:

  • an employee is terminated without reasonable notice;
  • an employee is terminated without notice for misconduct and there were no reasonable grounds to do so;
  • a fixed-term employment contract is terminated before the end of the term; and
  • there is non-compliance with the NES.

At Gibbs Wright Litigation Lawyers, our employment team helps clients resolve disputes, ensuring their rights are sufficiently protected. We are able to assist in a range of employment disputes, including those before the Fair Work Commission (FWC).

We assist both employers and employees in a wide range of matters, whether they are establishing or defending a claim. Contact us today if you are:

  • an employee, and you think that your employer has breached your employment contract or you have been wrongfully dismissed; or
  • an employer facing a dispute regarding a breach of contract or wrongful dismissal claim by an employee.

Note: There are legal differences between a claim for unfair dismissal (provided for under legislation) and a claim for wrongful dismissal (breach of contract), especially regarding limitation periods. If you believe you have been dismissed unfairly, please contact us immediately as you will generally  have only 21 days from the date the dismissal takes effect to lodge a claim (although exceptions may apply).2

Costs

Costs usually refers more specifically to legal costs incurred in bringing or fighting a claim. Upon a successful claim, you will generally be able to recover a portion of the costs of the legal fees incurred in fighting your matter. The procedure for claiming costs is different depending on circumstances, including whether your employment matter is resolved through taking action in state or federal courts or through the FWC. Some further information about each option is outlined below.

Fair Work Commission

The FWC has the discretion to order costs against another party if it is satisfied that a party unreasonably caused the costs to be incurred.

This decision is made by the Fair Work Commissioner and is determined on a case-to-case basis. Accordingly, if you make an unsubstantiated claim against a previous employer, or if you unreasonably defend a previous employee’s claim against you, you may be liable for the other party’s costs. It is important to note the FWC can make an order for costs only if you or your lawyer make an application for costs under the Act.

Court

Alternatively, the general principle of action resolved through the state or federal courts is that “costs follow the event”. This means that usually, the unsuccessful party will be ordered to pay a portion of the successful party’s reasonable legal costs incurred in bringing or defending the matter. This concept applies to plaintiffs and defendants alike.

Related matters

Adverse action

If you are an employee who has had a workplace right breached or been subject to discrimination, you may be entitled to damages. Adverse action is when a person engages in, threatens to engage in or otherwise organises any form of conduct that has an adverse effect on another party. For more information, see our Adverse action article.

Unfair dismissal

If you have been dismissed and you feel that the dismissal was unreasonable or excessively harsh, you may be entitled to compensation. For more information, see our Unfair dismissal article.

Frequently Asked Questions

An employment contract will exist immediately upon an employer and an employee agreeing to enter an employment relationship.

It is important to note that an employment contract between an employer and an employee can exist irrespective of whether it is in writing or not.

Unfair dismissal and wrongful dismissal are terms that are commonly used interchangeably, but they are not the same thing. In brief terms, unfair dismissal is a right of action that an employee may have under the Fair Work Act  when the dismissal is said to have been excessively harsh, unjust or unreasonable, whereas a wrongful dismissal claim is a breach of contract claim where an employer has terminated an employee’s employment contract, and the termination breaches a term of the employment contract.

If you believe you have been unfairly dismissed, please see our Unfair dismissal in Australia article for more information on unfair dismissals.

Employment contracts include both express and implied terms.

Express terms are those expressly agreed between the employer and employee. This generally refers to the written contract of employment; however, the terms can either be verbally or in writing. Where no written contract exists, it is important to examine all surrounding circumstances to determine the verbally agreed express terms.

Implied terms are terms that the employer and employee have not necessarily agreed to, but are implied into the contract by practice, common law or statute. For example, employment contracts may imply a term requiring the employer to act in good faith. Another common implied term is when an employment contract does not include a termination clause. In these cases, the law will imply a term that the employment contract can be terminated on “reasonable” notice. However, it is important to note that where an employment contract is in writing, there is less scope for terms to be implied.

Contracts can contain an “entire contract” clause, which states the written terms are the entire agreement between the party. Irrespective of this clause, there can still be additional terms implied into these contracts.

A breach of employment contract occurs when an employer or employee does not abide by the terms of the individual employment contract.

It typically occurs when:

  • an employee is terminated without reasonable notice;
  • an employee is terminated without notice for misconduct and there were no reasonable grounds to do so;
  • a fixed-term employment contract is terminated before the end of the term; and
  • there is non-compliance with the National Employment Standards.

Employees may be able to seek damages for financial loss caused by a breach of an employment contract or unlawful dismissal. This can include a range of losses, including:

  • wages and other remunerations;
  • injuries suffered due to wrongful termination of an employment contract, including personal injury by psychiatric injury; and
  • loss of opportunity to obtain alternative employment or be eligible for bonus schemes.

Common cases of when an employer breaches the employment contract arise when the employer:

  • dismisses an employee without adherence to the notice period in the employment contract;
  • terminates an employee’s fixed term employment contract before the end of the contract term;
  • dismisses an employee on the basis of severe misconduct, poor performance or redundancy, without having reasonable grounds to do so; or
  • compels the employee to resign due to their own conduct.

An employer may seek compensation for financial loss or damages if an employee breaches an employment contract by:

  • misusing an employer’s confidential information; or
  • contravening the terms of a valid restraint of trade clause within the employment contract.

An employer may further seek an injunction (a court order) restraining an employee from doing something against the employer.

Restraints of trade are unenforceable unless they:

  • protect an employer’s legitimate interests in its client relationships or its confidential information; and
  • go no further than is reasonably necessary to protect these legitimate interests.

Contact Gibbs Wright Litigation Lawyers

Contact Gibbs Wright Litigation Lawyers about your employment dispute for a free and confidential consultation to discuss your legal rights and options.

[1] Fair Work Act 2009 (Cth) Pt 2-2.

[2] Fair Work Act 2009 (Cth) s 366(1)(a).

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The content of this publication is intended as general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal advice. You can contact us at our Brisbane Office for a free consultation on a range of litigation matters on (07) 3088 6364.

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