Breach of Employment Contract by Your Employer: What You Can Do
This article applies to England, Wales and Scotland.
Important: This guide provides information about UK employment law. It is not legal advice. Every situation is different. If your employer has breached your contract, consider speaking to a qualified employment solicitor for advice specific to your circumstances.
In brief: When your employer breaks the terms of your employment contract — by cutting your pay, changing your hours, withdrawing benefits, or dismissing you without notice — that is a breach of contract. You can claim compensation for your financial losses, up to £25,000 at employment tribunal. The time limit is 3 months minus 1 day from your last day of employment (for tribunal claims). No minimum service period applies for breach of contract — though constructive dismissal, also covered in this guide, normally requires two years' continuous service.
Last updated: March 2026
Pay cut without agreement. Hours changed. Dismissed with no notice. Each of these may be a breach of your employment contract — and your employer is as legally bound by that contract as you are.
This guide covers what employer breach of employment contract means, what you can claim, and the steps to take.
What Counts as Employer Breach of Contract?
A breach of employment contract occurs when your employer fails to honour the terms of your agreement without lawful justification. The phrase covers a wide range of employer conduct — from unpaid wages and missing notice pay to unilateral changes to your working hours or job role. The contract does not have to be a signed document — it can be written, verbal, or implied by custom and practice.
Under the Employment Rights Act 1996 and general contract law, the most common forms of employer breach include:
Not paying agreed wages
Your employer must pay the salary or wages set out in your contract. Underpayment — whether deliberate or through error — is a breach. This includes:
- Paying less than your contractual salary
- Deducting money without lawful authority (separate rights apply under ERA 1996 ss.13–27, which prohibit unlawful deductions from wages)
- Failing to pay an agreed contractual bonus
- Not paying commission you have earned under your contract
Example: Your contract states £35,000 per year. Your payslips consistently show £32,000. The £3,000 shortfall is a breach.
Dismissing you without proper notice
Dismissal without proper notice is one of the most common forms of breach of employment contract. Your contract will state a notice period — or if it does not, the statutory minimum under ERA 1996 s.86 applies (one week per complete year of service, up to 12 weeks). If your employer dismisses you without giving that notice, or paying you in lieu of it, that is wrongful dismissal — a specific type of breach of contract.
Example: Your contract requires three months' notice. You are called into a meeting and told your employment ends today with no notice pay. That is a breach.
Changing your terms without agreement
Your employer cannot unilaterally change a fundamental term of your contract. Changes to pay, hours, location, job title, or duties require your agreement. Imposing a change without consent is a breach, even if your employer frames it as a "business requirement."
Common examples:
- Reducing your hours from full-time to part-time
- Cutting your salary or removing a contractual allowance
- Requiring you to work from a different location
- Demoting you or removing core responsibilities
- Adding duties that are materially different from your contracted role
If you continue working under the new terms without objecting, you may be taken to have accepted the change. If you want to preserve your right to claim, you should object in writing immediately and state that you are working "under protest."
Withdrawing contractual benefits
Benefits that form part of your contract — company car, private health insurance, pension contributions above the statutory minimum, phone allowance — cannot be removed without your agreement. Their withdrawal is a breach.
Not following contractual disciplinary procedures
If your employer's disciplinary procedure is incorporated into your contract (which is common where the employee handbook is expressly referred to), failure to follow that procedure can itself be a breach. This matters most in wrongful dismissal claims, where a flawed process can support the argument that the dismissal was in breach of contract.
Breach of the implied duty of trust and confidence
Every employment contract contains an implied term that the employer will not, without reasonable and proper cause, act in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. Malik v BCCI [1997] IRLR 462 (HL) established this implied term.
Breach of this implied term can support a claim for constructive dismissal — see the Constructive Dismissal section.
Wrongful Dismissal vs Unfair Dismissal
These two claims arise frequently together but they are legally distinct.
Wrongful dismissal is a breach of contract claim. It focuses on whether your employer had the right to dismiss you without notice — or whether they paid less notice than your contract required. It has no qualifying period, but compensation is limited to your financial losses during the notice period you should have received.
Unfair dismissal is a statutory claim under ERA 1996 s.98. It focuses on whether your employer had a fair reason for dismissal and followed a fair process. It normally requires two years' continuous service (reducing to six months from 1 January 2027 under the Employment Rights Act 2025).
You can bring both claims at the same time. Many dismissed employees do — the breach of contract claim covers the notice pay, and the unfair dismissal claim covers the broader circumstances of the dismissal.
For a full comparison, see our wrongful dismissal vs unfair dismissal guide.
Constructive Dismissal: When Breach Forces You to Resign
If your employer commits a serious enough breach of contract, and you resign in response to it, you may be able to claim constructive dismissal under ERA 1996 s.95(1)(c).
To succeed, you normally need to have at least two years' continuous service. Without two years' service you cannot bring a constructive dismissal claim unless the reason for resigning was automatically unfair (for example, related to whistleblowing, pregnancy, or trade union activity). This qualifying period reduces to six months from 1 January 2027 under the Employment Rights Act 2025.
You also need to show three things:
- Your employer committed a fundamental breach of contract — one that goes to the root of the employment relationship
- You resigned because of that breach — not for some other reason
- You did not delay too long before resigning — waiting for months risks being taken to have accepted the breach
Common breaches that can support a constructive dismissal claim include:
- A significant pay cut imposed without agreement
- Bullying or harassment that management refuses to address
- Demotion without consent
- A fundamental change to job duties or reporting structure
- Sustained breach of the implied duty of trust and confidence
Constructive dismissal claims are complex. If you are considering resigning in response to your employer's conduct, get legal advice before you do — the timing and wording of your resignation can be critical. See our constructive dismissal guide for full guidance.
What You Can Claim
Breach of contract at employment tribunal
You can bring a breach of contract claim at employment tribunal under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. The maximum award is £25,000.
Compensation is based on your actual financial losses from the breach — not a fixed formula. Typical heads of loss include:
- Unpaid wages or salary shortfall
- Notice pay (if dismissed without proper notice or PILON)
- Unpaid contractual bonuses
- Value of withdrawn benefits
- Unpaid accrued holiday pay
Worked example: Salary £42,000 per year (£3,500/month). Contractual notice: three months. Dismissed with no notice and no PILON. Gross claim: £10,500. If new employment starts six weeks into the notice period at the same salary, the remaining seven weeks' loss is approximately £5,654. That figure — not the full £10,500 — is what the tribunal would award, reflecting the duty to mitigate.
The tribunal will not award compensation for distress or inconvenience on a pure breach of contract claim — only financial loss.
You also have a duty to mitigate your losses. If you are dismissed without notice and find new employment before the end of your notice period, your award reduces to reflect the earnings you received. The tribunal expects you to take reasonable steps to limit your loss — failing to do so can reduce your award significantly.
Claims above £25,000
If your losses exceed the tribunal cap, you must bring the entire claim in the county court rather than the tribunal. You cannot claim £25,000 at the tribunal and then pursue the remaining balance in the county court for the same breach — once you use tribunal jurisdiction, the civil court is barred from hearing the same claim. County court claims have no cap but involve different procedural rules and costs exposure. For claims close to the £25,000 threshold, take advice on which forum is more appropriate before committing to either route.
Unlawful deduction from wages
Where the breach involves your employer taking money from your pay without authority, you may also have a separate claim for unlawful deduction from wages under ERA 1996 s.23. This claim can be brought in parallel with a breach of contract claim and has the same three-month time limit. There is no financial cap — you can recover the full amount deducted.
Time Limits
3 months minus 1 day from your last day of employment (the effective date of termination) for employment tribunal claims. This is the rule under the Employment Tribunals Extension of Jurisdiction Order 1994 — the clock runs from termination, not from the date of the breach itself.
For county court claims (for example where you are still employed, or your losses exceed £25,000), the limitation period is six years from the date of the breach under the Limitation Act 1980.
This is a hard deadline. Tribunals rarely extend it. The test for extension is whether it was not reasonably practicable to bring the claim in time — a strict standard.
ACAS early conciliation
Before submitting a tribunal claim, you must notify ACAS to start early conciliation. This is a legal requirement — you cannot file an ET1 without an ACAS certificate number. Early conciliation pauses your tribunal clock for up to 12 weeks (since 1 December 2025), and you receive at least one further month from the certificate date to file your claim.
Contact ACAS at acas.org.uk/early-conciliation or call 0300 123 1100. According to Ministry of Justice tribunal data, around 27% of breach of contract cases settle during ACAS early conciliation.
Do not leave this until the last few days. If you are near your deadline, contact ACAS immediately.
Will ERA 2025 change the time limit for breach of contract claims?
The Employment Rights Act 2025 extends most tribunal time limits from three to six months from October 2026. However, breach of contract claims at tribunal derive from the Extension of Jurisdiction Order 1994 — a separate statutory instrument — and the Act as drafted explicitly excludes breach of contract claims from the six-month extension. The legal position, confirmed by Mayer Brown and Lexology (January 2026), is that the three-month limit remains for this claim type.
Note: the ACAS website's ERA 2025 summary states the six-month limit will apply to "all claims" — this appears to be an oversimplification of the Act's actual wording. Until secondary legislation or a government clarification confirms otherwise, treat the three-month time limit as current for tribunal breach of contract claims and contact ACAS or a solicitor if you are near the deadline.
Your Options: What to Do
You have several options when your employer breaches your contract. Most can be pursued in combination.
1. Raise it informally. If the breach is minor or appears to be a mistake — for example, an underpayment on one payslip — raise it with your manager or HR first. Keep a written record of the conversation.
2. Raise a formal grievance. Put your complaint in writing and follow your employer's grievance procedure. Under the ACAS Code of Practice on Disciplinary and Grievance Procedures, this is the expected first step before tribunal action. If you unreasonably fail to raise a grievance, the tribunal may reduce your award by up to 25%. Conversely, if your employer unreasonably fails to follow the Code, your award may be increased by up to 25%.
3. Work under protest. If your employer is imposing a change to your terms, write to them immediately stating that you do not accept the change and are working under protest pending resolution. This preserves your right to claim without requiring you to resign.
4. Contact ACAS and file a tribunal claim. If informal routes have failed or are not appropriate, contact ACAS to start early conciliation. If that does not resolve matters, file your ET1.
5. Negotiate a settlement. Both parties can agree compensation without going to tribunal. Many breach of contract disputes settle at the ACAS stage — see our ACAS early conciliation guide.
6. Resign and claim constructive dismissal. If the breach is fundamental and makes continued employment untenable, you may be able to resign and claim both constructive dismissal and breach of contract. This carries risk — do not resign without legal advice first. See our constructive dismissal guide.
Breach of Contract vs Other Claims
| Breach of Contract | Unfair Dismissal | Unlawful Deduction | |
|---|---|---|---|
| Qualifying period | None | 2 years (6 months from Jan 2027) | None |
| Employment must have ended? | Yes (for ET) | Yes | No |
| Tribunal cap | £25,000 | No cap (statutory limits apply) | No cap |
| Time limit | 3 months minus 1 day | 3 months minus 1 day | 3 months minus 1 day |
| ACAS required? | Yes | Yes | Yes |
You can bring multiple claims where the facts support them. Breach of employment contract claims are commonly brought alongside unfair dismissal and unlawful deduction claims in a single ET1. employees to bring breach of contract (for unpaid notice), unfair dismissal, and unlawful deduction from wages together in a single ET1.
Frequently Asked Questions
Do I need to have been dismissed to bring a breach of contract claim at employment tribunal?
Yes, for the employment tribunal. Under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, your employment must have ended before the tribunal can hear a breach of contract claim — the claim must "arise or be outstanding on the termination of employment." ACAS confirms this: if you are still working for your employer, you cannot bring a breach of contract claim to an employment tribunal.
If you are still employed and your employer has changed your pay or hours without agreement, your options are to raise a grievance, work under protest, or bring a claim in the county court (which has no such restriction). Many workers find the most practical route is to raise a formal grievance first, then consider their options — including whether to continue or resign and claim constructive dismissal — with legal advice.
Is there a minimum service period?
No. You can bring a breach of contract claim from your first day of employment. This is one of the key advantages over unfair dismissal, which normally requires two years' service.
My employer says the change is "a business necessity" — does that override my contract?
No. A business justification does not give your employer the right to unilaterally change your contract. Changes to fundamental terms require your agreement. If they impose the change without consent, it remains a breach regardless of their reasoning.
Can I claim if the breach happened months ago?
Only if you are still within the three-month minus one day time limit from the date of the breach (or your last day of employment if dismissed). If the breach was ongoing — for example, consistent underpayment over several months — the time limit typically runs from the last unlawful deduction or the last date of employment, whichever is applicable. Tribunal case law on this can be technical — get advice if you are near the limit.
What if my losses exceed £25,000?
You must bring the entire claim in the county court — you cannot claim £25,000 at the tribunal and pursue the balance separately, as once tribunal jurisdiction is used the civil court is barred from hearing the same claim. County court claims have no cap and a six-year limitation period, but involve costs exposure. Take advice on the most appropriate forum before committing to either route.
Can my employer bring a counter-claim against me?
Yes. Under the Extension of Jurisdiction Order 1994, if you bring a breach of contract claim at tribunal, your employer can respond with a counter-claim — for example, to recover overpaid wages, the cost of replacing you during a notice period you did not work, or unpaid training fees. The same £25,000 cap applies to the counter-claim. Be aware of this before submitting a claim, particularly if you left without working your notice period.
Can I bring a claim if I signed a settlement agreement?
Generally no — settlement agreements under s.203 ERA 1996 are designed to waive your tribunal rights, including breach of contract claims, in exchange for payment. However, a settlement agreement is only valid if you received independent legal advice on its terms. If you did not, the waiver may not be effective.
Does this apply in Northern Ireland?
No. This guide covers England, Wales, and Scotland. Northern Ireland has separate employment legislation. Contact the Labour Relations Agency rather than ACAS.
Sources
- "Employment Contracts", ACAS (2025) — https://www.acas.org.uk/employment-contracts
- "Breach of contract", ACAS — https://www.acas.org.uk/breach-of-contract
- Employment Rights Act 1996, ss.13–27 (unlawful deductions), s.86 (notice), s.95(1)(c) (constructive dismissal) — https://www.legislation.gov.uk/ukpga/1996/18/contents
- Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994 — https://www.legislation.gov.uk/uksi/1994/1623/contents/made
- Malik v BCCI [1997] IRLR 462 (HL) — implied duty of trust and confidence
- "Making a Claim to an Employment Tribunal", GOV.UK — https://www.gov.uk/employment-tribunals/make-a-claim
- ACAS Code of Practice on Disciplinary and Grievance Procedures (2015) — https://www.acas.org.uk/acas-code-of-practice-on-disciplinary-and-grievance-procedures
- Employment Rights Act 2025 — https://www.legislation.gov.uk/ukpga/2025/26
- Employment Tribunal Statistics, Ministry of Justice (Q2 2025/26) — https://www.gov.uk/government/collections/tribunals-statistics