Breach of contract

If the employee does not agree to proposed changes and the employer goes ahead and changes them unilaterally, this is generally a breach of contract. The employee can do a number of things in response:

• accept the change;

• refuse to work under the new terms: it is then up to the employer to decide what to do;

• object to the new terms, but carry on working under them while taking legal action;

• carry on working but treat themself as dismissed and claim unfair dismissal (only if there is a substantial difference in terms);

• resign and claim constructive dismissal (if there is a fundamental breach); or

• consider whether the change is valid under TUPE (see Chapter 12).

For more information see Chapter 10: Dismissal.

Employees who continue working following a breach of contract may be taken to have accepted the change and therefore waived their right to pursue a breach of contract claim. If they wish to challenge the breach, it is important for them to make it clear that they do not accept the changes, and to act quickly in getting legal advice and in pursuing a claim. If they are not immediately aware that there has been a change, they should protest as soon as they become aware of it.

To maintain the position, at the very least employees should regularly renew their objection, for example, on each monthly pay day (Burdett-Coutts v Hertfordshire County Council [1984] IRLR 91). Collective legal action, for example, issuing claims for unlawful deduction of wages in the employment tribunal, may be necessary.

Unlike a claim for unlawful deduction of wages (see Chapter 4), an employee cannot claim for contract breach in the employment tribunal unless the employment has ended. In most cases, while an employee is still employed, any claim for breach of contract can only be brought in the civil courts (Small Claims Court, County Court or High Court, depending on the value of the claim).

Contract claims in the employment tribunal are capped at £25,000, so employees whose claim is worth more than this may opt for the civil courts, even if the contract has ended. In civil court claims, the losing party pays the costs of the winning party. This means that a contract claim in the civil court carries a high risk of being forced to pay the employer’s legal costs, which are likely to be substantial. Legal advice is essential before bringing this kind of claim.

Employees sometimes choose the civil courts instead of the employment tribunal because they miss the tribunal time limit. The time limit for breach of contract claims in the civil courts is six years (as opposed to the three-month limit in most employment tribunals). For example, in Birmingham City Council v Abdullah [2012] UKSC 47, the Supreme Court confirmed that 174 former dinner ladies could bring equal pay claims as breach of contract claims in the civil courts after they missed the tribunal deadline for their claim.

A court has the power to order the employer to restore the contract to its original provisions, and to award damages (losses). In most circumstances, it is more straightforward to bring a claim in the employment tribunal for unlawful deduction from wages than a civil court claim for breach of contract (see Chapter 4: Unlawful deduction of wages). An unlawful deduction of wages claim is also better if there is a risk of the employer trying to counter-claim for breach of contract by the employee (see Other remedies, page 96). However, the requirement to pay high fees to access the employment tribunal is now a factor, especially with small claims. In some circumstances a worker will be better off enforcing claims, such as for wages or holiday pay, as money claims in the Small Claims Court (see Chapter 1).