Guide

The employment contract

Breach of contract claims

If an employee suffers a loss through your failure to observe the terms of their contract of employment, they may make a claim for breach of contract.

Breach of contract claims in Industrial tribunals

An industrial tribunal can only hear a breach of contract claim if the claim either:

  • arises on termination of the employee's employment
  • is outstanding on the termination of the employee's employment

The claim must also not relate to:

  • personal injury
  • a term imposing an obligation of confidence
  • a term which is a covenant in restraint of trade
  • a term relating to intellectual property, eg copyright, rights in performances, moral rights, design rights, registered designs, patents and trademarks
  • a term either requiring you to provide the employee with living accommodation or imposing a duty relating to the provision of living accommodation

These rules apply to both employee claims and employer counter-claims.

Awards for breach of contract claims

The tribunal may award an employee damages for their loss, eg a payment of arrears of wages, holiday pay or pay in lieu of notice.

Any award for damages is limited to £25,000.

If the employee wishes to claim more, they cannot first seek £25,000 from an Industrial Tribunal and then go on to seek the balance from a civil court.

Making a counter-claim

You may make a counter-claim to the tribunal if you suffer a loss through the employee's failure to observe the terms of their contract of employment.

However, you can only do this if the employee has already presented a tribunal claim and not since withdrawn or settled it. If the dismissed employee withdraws their breach of contract claim after you have made a claim, your claim can still be considered by the Industrial Tribunal/arbitrator.

Time limits for making a tribunal claim

An employee has three months after the date of their termination of employment to make a breach of contract claim to an Industrial Tribunal. This is irrespective of whether or not an internal appeals procedure is being used.

You may make a counter-claim at any time up to six weeks after you receive a copy of the employee's original application (the ET1 (NI) form).

The tribunal can extend the three-month limit where it considers reasonable and where it is satisfied that it was not reasonably practicable for the complaint to be made within the specified time.

However, the six-week period for counter-claims cannot be extended.

The Labour Relations Agency Arbitration Scheme

Certain claims to industrial tribunals in Northern Ireland can also, as an alternative, be resolved through arbitration using the Labour Relations Agency (LRA) Arbitration Scheme.

See employment-related tribunal claims: LRA Arbitration Scheme.

Contractual claims outside the tribunal system

Certain types of contractual claim can only be resolved by bringing a claim to the civil courts. These are:

  • claims for damages in respect of personal injuries
  • claims arising during the course of the employee's employment
  • where you want to present a contractual claim against an employee but the employee has not themselves presented a claim to a tribunal

Civil courts can hear claims up to six years after the breach of contract occurred and there is no cap on the amount of damages they can award.

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