What happens if an employee breaks employment contract Australia?
When either party fails to fulfill their end of the contract, it is considered as breaching an employment contract Australia. Employment contracts are legally binding agreements between employers and employees that establish the terms and conditions of their working arrangement.
Here’s an article that can help simplify Australian employment law in relation to the effect of breaching an employment contract by an employee.
Types of Breach of Employment Contract Australia
There is a breach of employment contract when either party fails to comply with the terms of the contract. Several types of employment contract breaches exist in NSW. An employer commits a breach of contract of employment when there is:
- Non-payment of Wages. The law obliges employers to pay their employees for all the hours worked. Failure to pay wages on time or in full is a clear breach of an employment contract.
- Unreasonable Changes to Employment Conditions. Employers cannot just change an employee’s employment conditions without their consent. If they do make any change, it must be reasonable and in line with the terms of the fixed-term employment contract.
- Unfair Termination. This is prohibited by law. If an employer terminates an employee’s contract without a valid reason or without following the correct procedures, it may be considered an unfair dismissal.
- Discrimination. The law looks down on workplace discrimination. Employers must not discriminate against employees because of their race, gender, age, religion, or any other personal characteristic. Thus, the law considers discrimination as a breach of an employee’s employment contract and is illegal.
On the other hand, an employee commits a breach when any of the following circumstances occur:
- When there is use of the employer’s confidential information by the employee;
- When an employee exploits the intellectual property of the company; or
- When an employee resigns from work without proper notice to the employer.
Remedies for Breach of Employment Contract Australia
When there is a breach of the employment contract, the non-breaching party may be entitled to remedies. The remedies for a breach of employment contract Australia include damages, specific performance, and injunctions.
- 1) Damages
Damages are monetary compensation awarded to the aggrieved party to compensate for any loss they have suffered because of the breach. The damages awarded depend on the extent of the violation and the loss suffered by the aggrieved party.
- 2) Specific Performance
Specific performance is an equitable remedy that requires the party in breach to perform their contractual obligations. This remedy is only available in certain circumstances where monetary compensation is insufficient.
- 3) Injunction
An injunction is an order from the court that prohibits a party from doing something or requires them to do something. This remedy is available in situations where the breach of the employment contract is ongoing and the innocent party needs urgent relief.
- 4) Rescission.
Rescission is a remedy that cancels the contract and puts the parties back in their position before the contract is made. This remedy is only available in certain circumstances, such as when the breach is so severe that it goes to the root of the contract.
Ways to Prevent Breach of Employment Contract Australia
Here are some ways to prevent a breach of employment contract in Australia:
1. Clearly Define Terms and Conditions.
To prevent a breach of employment contracts, it is essential to define the terms and conditions of the employment agreement clearly. It must outline the roles and responsibilities of both the employer and employee. Furthermore, it must state the exact length of the contract. Any restrictions or obligations must also be provided in the contract.
2. Provide Sufficient Training and Support.
Employers should provide adequate training and support to their employees to help them understand their obligations and responsibilities under the employment contract. This can help prevent unintentional breaches of the contract.
3. Communicate Effectively.
Effective communication between the employer and employee is crucial in preventing breaches of employment contracts. Employers should ensure that their employees are aware of any changes to the terms and conditions of the contract and provide regular feedback on their performance.
4. Seek Legal Advice.
Employers should seek legal advice when drafting employment contracts to ensure compliance with NSW employment laws and regulations. This can help prevent any potential breaches of the contract.
5. Enforce the Individual Employment Contract.
Employers should enforce the terms and conditions of the employment contract. This includes taking action when an employee breaches a contract, such as issuing warnings or terminating the contract.
By following these steps, employers can prevent breach of employment contracts in Australia and maintain a positive working relationship with their employees.
Employee Breach of Contract Australia
As mentioned, either party can breach the contract, so an employee breach of contract in Australia is also possible. For example, if an employee shared any confidential information of the employer, it could be a breach of their contract. Similarly, if an employee starts working for a competitor when the contract specifically has a restraint of trade clause, this will also be a breach by the employee.
Best Practices for Creating and Managing Employment Contracts
Employment contracts are the core of the employer-employee relationship in any business. It sets out the terms and conditions of employment between the employer and employee and provides a clear framework for the employment relationship.
To avoid a breach of employment contract Australia, here are some best practices for creating and managing employment contracts:
Ensure compliance with the law
Employment contracts must comply with the law. In NSW, employment contracts must comply with the Fair Work Act 2009 and any relevant awards or enterprise agreements. Employers should seek legal advice to ensure their employment contracts comply with these requirements.
Keep employment contracts up to date
There should be a regular review and updating of employment contracts to reflect law or business requirement changes. Employers should ensure that employment agreements remain current and relevant, and are consistent with the employer’s policies and procedures.
Provide a copy of the employment contract to employees
Employers should provide employees with a copy of their employment contract and ensure that they understand the terms and conditions of their employment. This will help avoid any misunderstandings or disputes in the future.
Seek legal advice when terminating an employee
Employers should seek legal advice before terminating an employee. The employer must terminate an employee in a manner that is in accordance with the law and any relevant employment contracts, awards, or enterprise agreements. Employers should ensure that they follow the correct procedures and provide the employee with any entitlements the law provides.
A breach of an employment contract in Australia can have severe consequences for both employers and employees. In NSW, laws protect employees from violations of their employment contracts, including providing avenues to seek remedies for any losses suffered.
Employers should ensure that their employment contracts comply with the law and do not contain any unfair terms. Employees who believe there is a breach of their employment contracts should seek legal advice to understand their rights and options.
Seeking Legal Advice from Employment Lawyers
If you believe there has been a breach of your employment contract or instances like wrongful dismissal, you should first attempt to resolve the matter with your employer. If this is unsuccessful, you may need to seek legal advice.
Legal action can be expensive and time-consuming, so seeking advice from a qualified legal professional is crucial before proceeding. Our team of employment lawyers at JB Solicitors can advise you on your rights and options, as well as the likely costs and risks of taking legal action.
Contact us an employment lawyer today if you need help with employment law matters such as employee breach of contract Australia, employer breach of contract, or unfair dismissal.
Last updated: 14 March 2025
