How Human Resources Managers Should Handle Breach of Contract of Employment

HR managers ensure the employer-employee relationship remains mutually beneficial to foster organizational productivity and a harmonious work environment.

The relationships that exist between employer and employee are contractual. This relationship is evident in the fact that most times, there are terms and conditions agreed on by both parties in a contract of employment. However, even with best intentions and meticulous attention to detail during the hiring process, situations may arise where an employment contract is breached.

In this article, I will walk you through the meaning of a breach of contract of employment and how HR managers should handle it.

What Is Breach Of Contract In Employment?

A breach of contract connotes that a party in an agreement or contract had acted contrary to the terms of the contract either by non-performance by performing the contract not following its terms or by wrongful termination of the contract. It follows, therefore, that a party who had served the contract under its terms and conditions cannot be said to breach it.

When conducting a recruitment process, a letter of appointment is issued to successful applicants. The letter of appointment most times comes with terms and conditions attached, which an employee is expected to read through thoroughly and sign a duplicate copy of the letter if he agrees to the terms and conditions of the contract of employment or, in the alternative, write an acceptance letter of the job offer. Suppose the successful applicant signs or writes an acceptance letter. In that case, he is bound by the terms and conditions contained therein, and a failure, refusal or neglect to comply with these terms and conditions would amount to a breach of contract of employment.

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Types of Breach of Contract

There are four types of breach of contract;

1. A minor breach

A minor breach is, by its nature, not a serious breach that could give rise to the other party bringing an end to the contract by termination. Examples of minor breach are;

• Failure to follow the organizational procedure in requesting time off.
• A temporary delay in providing certain employment benefits by the employers.
• A slight deviation in the agreed work schedule due to unforeseen circumstances.
• Minor discrepancies in recording working hours or expenses

2. A material breach

This type of breach of contract touches on material terms and conditions of the agreement voluntarily entered into by the employer and employee. Material breach is a significant violation of either party to fulfil the terms and conditions outlined in the employment contract. Examples of a material breach are;

• The inability of an organization to provide the promised job position or responsibilities as stated in the agreement.
• Unjustified termination or dismissal without adhering to the contract’s termination provisions.
• Failure to pay the agreed salary or benefits on time and in full.
• Violation of non-disclosure or non-compete clauses, revealing sensitive information or joining a competitor.

3. A fundamental breach

A fundamental breach of contract in employment occurs when one party fails to fulfil a crucial or essential aspect of the agreement, making it difficult or impossible for the other party to continue the contract as initially intended. Some examples of a fundamental breach are;

• Changes to terms of the contract by the employer without agreement.
• Misrepresentation or fraud by employees.
• Discrimination and harassment by employer.
• Failure of the employer to provide a safe work environment.

4. An anticipatory breach

An anticipatory breach implies that there are signs that the other party in the agreement is likely not to perform his part of the contract freely entered into, thereby occasioning a breach of contract. Examples of anticipatory breach are;

• Advance notice of employee resignation.
• Pre-announcement layoff by employers.
• A clear indication of non-compliance either by employer or employee.
• Engagement in activities that violate the contract.

How Can Human Resources Managers Handle Breach Of Contract In Employment?

1. Review the contract of employment

HR managers should not be in a rush to enforce any decision if an employee violates an employment contract. Instead, they should review the employment contract to understand better some specific terms such as contract duration, confidentiality agreement, job responsibilities, etc.

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2. Have your evidence

Before taking any action, HR managers need to gather evidence related to the breach of employment contract by the employee. Some of this evidence can include emails, witness statements, formal company documents, etc.

3. Negotiate with the employee

One of the ways the HR managers can handle a case of breach of contract is to negotiate informally with the employee. Informal negotiation is necessary because alternative dispute resolution is also a means by which parties can amicably resolve any dispute, and most importantly, it is cost-free.

Approach the conversation with a fair and open-minded attitude. Listen to their explanations and consider any mitigating factors that made them breach the contract.

4. Try the informal resolution

If the breach is minor and can be resolved amicably, HR managers should consider exploring informal resolution options like counselling, retraining, providing additional support, etc. This option will help the employee comply with the terms of the contract.

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5. Seek organizational redress

The HR managers may seek advice from the legal department or superior officers of the organization if the resolution doesn’t work. Superior officers may be better positioned to guide the best action and the potential legal ramifications.

6. Terminate if negotiation and resolution don’t work

In the alternative, the HR managers may dismiss or terminate the employee’s employment either with reasons. However, such termination or dismissal must follow due process; hence such termination could among to wrongful termination of employment if successfully challenged by the dismissed employee in court.

7. Seek legal redress if contract breach involves damages

The HR manager can seek legal redress in court in the form of damages for breach of the terms specified in the appointment letter. It is pertinent to note that damages for the violation of the contract are payable by the party responsible for the breach. A valid agreement binding on both parties makes a claim for damages possible.

Conclusion

The HR managers of an organization should ensure that the terms and conditions governing an employee’s employment are clearly specified and adhered to by the employer. These terms and conditions should be identified because the right to seek legal remedy in breach of any term and conditions of the contract of employment inures to both the employer and employee.

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