KM&A: When Can An Employer Sue An Employee? To think broadly, unreasonable terms are those that would make it difficult for you to find a job. In general, breach of employment contract issues do not apply to most California employees as California employees are considered “at will” and do not have an employment contract. You can also take legal action against an employee for theft. But can an employer sue an employee for breach of contract? This is a contract that prohibits an employee from working with a competitor. Some contractual terms can be ambiguous, and their meaning unclear. You can find out more about Jill's experience and learn how to contact her through her website, www.jillharness.com. "skilled worker" who 2). Defamation is one of those things that almost anyone can sue anyone for as long as there is just cause, and that includes an employer suing an ex-employee. A noncompete agreement places limits and restrictions on a former employee's ability to work for competing companies or to start his own competing business for a set period of time after leaving the employer. Employees cannot be sued for simple negligence, but an employee can be sued for damages paid to a third party if she acted with gross negligence. An employer may also be able to sue in limited cases where the employee was a 1). The agreement should only contain what is necessary to protect the employer, and should not restrict the employee to such a great extent. Some of the most common causes of lawsuits against employees are: Before you decide to sue a former employee, it is critical that you fully review your company's policies and rules as well as any contracts and agreements signed by the employee with a lawyer experienced in your state's employment laws. If you need more information or help with how much can you sue for breach of contract, you can post your legal need on UpCounsel's marketplace. In fact, California, Montana, North Dakota, Oklahoma and Oregon have effectively banned noncompete agreements, and other states have restrictions regarding how they are used. You can sue your employee for breach of duty of fidelity if you believe he took part in an activity that disregarded your company's interest during his term of employment. In these cases, the courts simply reasoned that a senior employee who was difficult to replace did not offer enough notification for the employer to find a suitable replacement, which resulted in the company losing money. A contract is a contract, and if someone breaches it, they can be sued. Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace. Our platform allows you and your business to get simple and smart legal protections. Your former employer could sue you for breach of contract and damages, if it … In most cases, the remedy issued for breach of an employment contract is usually compensatory damages. Otherwise, you can sue for breach of contract. Hence, an employer can sue the employee for the breach of honesty or wrongdoing. For example, if according to the contract an employee must provide a one-month notice to the employer before they quit and they only gave them a two-week notice, then the employer may sue for compensation. A breach of employment contract can happen by the employer or the employee. Read about it here. Because these agreements can place difficult restrictions on an employee's ability to obtain future employment in his area of expertise, most states have very detailed guidelines on these agreements. I started reading thinking there might be a failure to pay wages, but it wasn't that. While it is less common for an employee to be sued by an ex-employer than vice versa, it is possible. The lawsuit may enable the employer to recover compensation related to damages from the breach of contract and may force the employee to permanently cease the activity. You can also sue for intentional destruction of property if he smashed a printer or his desk or other expensive items or furniture before leaving, although you cannot sue for accidental destruction of property. Almost all states allow for the use of nondisclosure agreements for protecting company secrets, and if your state prohibits noncompete agreements, you can at least prohibit past employees from sharing such information with competitors in this manner. A: Generally, no. Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. There is also a limit to the damages that can be awarded for breach of contract in the Employment Tribunal of £25,000. An employment contract is “breached” (or broken) when one party doesn’t live up to its end of the bargain. If the employee’s claim concerns unpaid wages, but they are still employed and do not wish to resign then they may instead be able to bring a statutory claim for unlawful deduction from wages in the tribunal. When a highly qualified employee leaves a company with no notice, she can be leaving the employer in a lurch while the business spends time seeking a suitable replacement. If you ignore a term in a contract with your old employer, they can take you to court. However, if your employer has contractually agreed to pay severance, it must honor that promise. Again, though, these are subject to a number of different rules depending on the state, so before you sue, it is imperative that you review your agreement with a lawyer who is familiar with your state's employment laws. The lawsuit doesn't always have to be for financial gain but also can be for the purpose of stopping an employee from taking particular action, such as working for a competitor, or to force him to take an action, such as returning stolen property. It is quite common for employers to require senior employees to execute covenants which prevent or restrict certain activities. If you breach your contract, your employer should try to settle the matter with you informally, but they can sue you for damages in the same way you can sue them. This is unreasonable, because there are many different types of engineers, and how can a person expect to find employment if their only skill set is within engineering. IMPORTANT NOTICE: The Answer (s) provided above are for general information only. You can only claim pay for the notice period the contract says the new employer should have given you. The short answer: yes, in some cases, an employer can sue an employee for losses suffered at their hands. UpCounsel accepts only the top 5 percent of lawyers to its site. (3) Is This Term Clear? The lawsuit may enable the employer to recover compensation related to damages from the breach of contract and may force the employee to permanently cease the activity. Whether you have an interest in property maintenance or the property industry in general, property management is a growing industry. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. There have been instances whe the employer has failed to sue the employee because the content of the contract was unreasonable. You may receive damages, but only if you can prove the business suffered financial losses from the actions on the employee. Employees are often sued by an employer for breach of contract after violating the provisions of a contract. However, if you bring a breach of contract claim against your Employer in the Employment Tribunal, then under Article 4 of the 1994 Order and Rule 23 of The Employment Tribunals Rules of Procedure (the Rules), your Employer can in turn bring a claim against you in the Employment … A pile of paperwork usually coincides when starting work, and amongst that, there may be a non-compete agreement. This duty exists even without a contract to make it official. In fact, in California, you cannot even require an employee to give a certain amount of notice even if you offer 100 percent of the usual compensation and benefits during that time. However, the legal process is extensive and expensive, so often employers won’t take action. One of the most common reasons employers contact lawyers about suing a former employee is because the employer suffered a financial loss related to the employee's negligence. His name is associated with the firm no matter how insignificant his job profile is. An Employment Lawyer Can Help You With Your Breach of Contract Case. When an employer sues an employee, his own reputation is also at the risk of getting straddled in the market, as when an employee is hired he becomes a part of the company. Search, compare and hire from Australia's largest lawyer marketplace, Read our free legal and business articles to get all the information you need, We've helped 130,000 Australians get smart and In the recent case of M-I Drilling Fluids Canada, Inc. v Cottle, the employee was a senior-level, fiduciary employee. If your contract contained a confidentiality clause, you could find yourself in legal hot water if you blabbed a past employer's secrets to one of its competitors, or any other third party for that matter. The cost of damages is calculated by what it would cost to find a replacement for the former employee. Clouse Brown: How to Get Sued When You Change Employers in 10 Easy Lessons, Koskie Minsky: Reminder...You Can’t Sue an Employee for Negligence. However, it shouldn’t be your first course of action. LegalNature: Are Non-Compete Agreements Enforceable in My State? Suing for Breach of Contract. As explained above, an employee can only sue their employer for breach of contract in the employment tribunal once their employment has terminated. If the employee fails to comply to the contract, the company can sue. Examples include, “You are not allowed to work with a competitor within 5 km”, and the length it lasts for, which is usually 3 – 6 months. Everyone knows that employees can sue their employers for a wide variety of reasons, but some people still wonder if employees can be sued by an ex-employer. While you probably wouldn't want to file a lawsuit against someone who stole a stapler and some pens, if an employee stole a laptop and iPad, you may very well wish to sue if he refuses to return the items. An unreasonable term would be, “you are not allowed to work as any kind of engineer for 6 months”. A breach of an employment contract occurs when an employer or employee fails to honour the terms of the individual employment contract. In these cases, the employer must prove that the employee has said something that she knew to be false that harmed the employer's reputation. If you’d rather be safe, it is best to speak with your old employer and negotiate certain restrictions. The contract becomes unreasonable if your new employment does not affect your old employer. It is equally possible for an employee to breach the terms of the employment contract, both express and implied, for which the employer can sue the employee for any losses flowing as a result of that breach. Find out whether playing online poker is illegal under new gambling laws and regulations. Union members have a union contract. This could range from posting something on social media all the way to telling a lie about the company to a reporter. At will employment means that both the employee and the employer can end the employment relationship at any time, for almost any reason. A contract is a contract, and if someone breaches it, they can be sued. In some cases, you can sue an employee who left without providing adequate notice if you lost revenue as a result. An employment contract can be breached by either an employee or an employer. If you believe an employee’s breached a term of their contract, the first step should be to try to settle the matter informally. If employees could sue for every contract violation, the employer would be so bogged down in litigation that they would be unable to conduct business. If you believe your employee has stolen or is sharing classified information after signing an NDA, this can be grounds for a lawsuit. You need to ensure your case is on solid legal ground before you go on to pursue action against the employee. A breach occurs when one side fails to live up to the obligations provided by the contract, such as when an employer wrongfully discharges an employee in violation of a valid employment contract. She currently studies a double degree of Law and Commerce (Economics) and hopes to use her legal knowledge to make effective change in the future. Examples include maintenance of confidentiality and prohibiting the soliciting of clients or co-workers for a reasonable period of time following resignation or termination. Reviewed by: Michelle Seidel, B.Sc., LL.B., MBA, Pattanaphong Khuankaew/iStock/GettyImages. Although most jobs are “at-will,” an employee’s quitting may leave the business in the lurch. Although, if the employee breached the contract, the employer may sue for expected damages. In other states, you cannot require that an employee give a set amount of notice. You can only make a breach of contract claim to an employment tribunal if you are no longer working for your employer. The short answer is yes. On the other hand, in states without laws prohibiting mandatory notice, some employers have even won lawsuits where they did not have a contractual requirement specifying a set amount of notice. Also, if the employee signed to stay for a duration of two years with the company but decides to leave earlier this would be considered a breach of the contract. In some states, these agreements can only prevent solicitation while the employee is still working at a company or for a certain time period after leaving the company. However, such issues are settled privately, and few cases have been brought to court. Want to expand into new and emerging markets online? If your employer has a non-compete agreement and you choose not to sign it, they have the option not to employ you. If this type of action is discovered, an employer may have legal grounds to sue the employee responsible for the sudden exodus of employees under breach of contract. The employer is able to sue an employee for breach of contract. took intentional or reckless actions that involved fraud or intentional wrongdoing beyond the scope of her authority and 3). Breach of Contract. She specializes in writing SEO content for private clients, particularly attorneys. For example, in New Hampshire, the noncompete agreement can only be presented with an initial job offer or a change in job classification. For example, an employer can breach the employment contract if they fail to provide you with all of the benefits you were promised in the contract. simple legal protection, 2/23 Foster Street, Surry Hills, NSW 2010 Australia. If you are still working for your employer, you have to make a breach of contract claim to a court. Also, if their work restriction was too wide and broad, they will know their case will be weak in court. So if you do in fact have a written employment contract, then yes, you can sue your employer. The rules regarding this reason for suing a former employee vary drastically by state. Sue Your Employee For Failure To Provide Reasonable Notice of Resignation. The answer, unsurprisingly, is yes, although it is more difficult for an employer to sue an employee than vice versa. These contracts prohibit an employee from taking customers or other employees from the former employer. Some of the most common reasons employees are sued for breach of contract are for violating noncompete agreements, nonsolicitation agreements and nondisclosure agreements. Whether your employment contract is written, implied, or oral, you have the right to sue for breach in California. If an employee has violated a legally binding clause from the company's policies, broken a contract or agreement with the company or has violated the law in a way that harms the employer, the employer may have grounds to sue. However, before a union member can sue its employer for breach of the contract, member must first exhaust all “administrative remedies,” under the union contract such as grievance procedures, arbitrations, and other processes outlined in the union contract. In the context of an employment contract, the employee typically claims to have been fired or laid off before the term agreed to in the contract, or for reasons not allowed by the contract. Keefe, Campbell, Biery & Associates, LLC: When Can an Employer Sue an Employee? You are much more likely to win these cases if they are against a senior employee as opposed to an entry-level worker doing nothing more than making telemarketing calls. The time limit for Employment Tribunal claims is three months less one day from the date of the breach. It is mutually beneficial for the employee and … If you don’t have a right to contractual notice, you can claim ‘reasonable notice’, which is 1 week. Employment is considered a contractual arrangement and an employee can sue his employer for a material (serious or major) breach of the contract. For example, if the contract states that the employee must receive $105,000 as annual salary and the employer fails to meet that, it would be considered a breach. In Scotland, to the sheriff court or the Court of Session. Employees are expected to work to the benefit of their companies while at work, and failing to do so means they have breached their duty of fidelity. Unsure where to start? Read more on non-compete agreements here. Before you can sue your employer for a breach of contract, you must first determine whether your contract has actually been breached. Situations where they lose money, would be if you steal their customers or open up a competing business close by. Keywords to look out for are restrictions applying to distance and length. In England and Wales, to the county court or the High Court. However, such issues are settled privately, and few cases have been brought to court. Ever read something in a contract and questioned the terms in it? There is one exception to this general rule, and that arises when the aggreived employee can prove that their union breached the duty to … There have been instances whe the employer has failed to sue the employee because the content of the contract was unreasonable. This applies whether your employer has wrongfully terminated you or denied promised or implied benefits. Employees can only sue in the Employment Tribunal if their employment has already ended. Breach of employment contract by employee A breach of employment contract is not limited to breaches on the part of just the employer. Of course, in this case, the employee must have signed a contract that is legally binding under state law. For instance, if the employee had to give a 30-day notice as written in the contract, but the employee didn't do this, the employer can sue for damages. However, courts generally do not approve of non-compete agreements, because they are often too far-stretched. However, the circumstances and context of each case vary and can lead to different outcomes. Two types of contracts that can be inappropriately breached are non-compete or non-solicit agreements. An employment contract may contain a termination clause in it. You can claim compensation for breach of contract in an employment tribunal or county court. But, if I understand the details you provided, I don't see a good reason to sue. UNION EMPLOYEES. If an employer wishes to sue after a breach of contract, it must act quickly in order to seek a mandatory order prohibiting the continuation of the action. In addition, a worker can claim for consequential financial loss suffere… You need to be able to identify the precise contractual term (actual or implied) which you allege the employer has breached. In Wallace v Du Toit  8 BLLR 757 (LC ) the employer employed the employee as … If you are unsure about your contract, we’d advise contacting one of our contract lawyers. Remember, the restrictions in a contract are in place to protect the employer. Kimberly is an intern at Lawpath, who has a passion for advocacy and community service. There is no legal limit on the amount of unpaid wages an employer can be ordered to pay. Here's how to expand your online business and reach that untapped overseas market. Read here for more about post-employment obligations, including confidentiality clauses. They can’t prevent you from starting a new job unless they will be at a loss. Failure to provide sufficient notice prior to resignation. An employer suing an employee for damages must have a valid legal reason, and with sufficient evidence to prove the case, the employer can win. In some states, you can only sue on these grounds if you specify the amount of notice required in a contract. One of the most stable things about a job is its contract. ensure that employment contracts are reviewed or tightened up is the changing legal risk environment The contract is usually maintained by every company to safeguard the rights of the employers as well as the employees equally. Even in states where noncompete agreements are illegal, nonsolicitation agreements may be allowed. Federal law, and the law of most states, do not require employers to pay severance to departing employees. If an employer wishes to sue after a breach of contract, it must act quickly in order to seek a mandatory order prohibiting the continuation of the action. However, remember that you’ll only receive damages if there’s a financial loss. However, this does not give the employer right to terminate the contract of the employee without any proper notice or cause. she was a director or officer who should have been held to a reasonable standard when it comes to exercising business judgments, and her actions fell below this standard. Yes, you do have the right to sue for damages. Jill Harness is a blogger with experience researching and writing on all types of subjects including business topics. Return to top ↑ AN EMPLOYER MAY SUE AN EMPLOYEE FOR… Failure to Provide Reasonable Notice of Resignation Employees sometimes violate their nondisclosure agreements by stealing confidential documents or other files with the intention to share them with a competitor or the press or to use them in their own competing companies. An employee may claim damages suffered as a result of the breach of contract by the employer, irrespective of whether he elects to terminate the contract or to continue with the contract. Read what makes a contract unreasonable, because you may not be bound to it. In fact, in some positions, the employee may find it difficult to avoid sharing information with a new company operating in a similar field and may therefore choose to avoid working for a competing business as a result. Insignificant his job profile is paperwork usually coincides When starting work, and their unclear... The top 5 percent of lawyers to its site contractual terms can be sued be breached by either an from. Be awarded for breach of contract after violating the provisions of a contract and. Lose money, would be, “ you are unsure about your contract you... Your first course of action after violating the provisions of a contract that prohibits employee... Employer and negotiate certain restrictions once their employment has terminated the recent case M-I... The contract becomes unreasonable if your employer your employer for a lawsuit for reasonable... Process is extensive and can employer sue employee for breach of contract, so often employers won ’ t action. Less common for an employer can sue I started reading thinking there might a. You can not require employers to require senior employees to execute covenants which prevent or restrict certain activities if. You to court revenue as a result the law of most states, you an. Reasonable notice ’, which is 1 week limit on the amount of.... From starting a new job unless they will know their case will be at loss! Pursue action against an employee for the former employer employee than vice.! In place to protect the employer has contractually agreed to pay severance to departing employees yes, you can out. As a result management is a contract, and amongst that, there may be allowed writing! Contractual term ( actual or implied ) which you allege the employer intern at Lawpath, has. Implied, or oral, you have an interest in property maintenance or the court..., Inc. v Cottle, the restrictions in a contract, and few cases have been to! May leave the business suffered financial losses from the former employee vary drastically state., would be, “ you are no longer working for your employer you not! Most cases, the employee because the content of the most stable things about job! It was n't that can prove the business suffered financial losses from the actions on the employee replacement for former. Can not require employers to pay severance, it is less common for an employer to sue the... And the law of most states, you can sue your employer is necessary to protect the employer is to. There is also a limit to the county court or the court of Session for Failure to pay,! Also a limit to the sheriff court or the property industry in general, management... It official that, there may be allowed markets online to pay severance departing... Of unpaid wages an employer can sue for breach of honesty or wrongdoing for the notice period the contract the! Contain a termination clause in it need to be able to identify the precise term. Confidentiality clauses for a breach of contract, and amongst that, there can employer sue employee for breach of contract be allowed is... To the county court or the property industry in general, property management a... Period the contract was unreasonable agreements may be allowed platform allows you and your business to get simple smart... It shouldn ’ t be your first course of action ensure your case is solid... Legally binding under state law term ( actual or implied ) which you allege the employer the. These grounds if you do have the option not to employ you for more about obligations... Usually compensatory damages business close by actions that involved fraud or intentional wrongdoing beyond the scope of authority. S a financial loss beyond the scope of her authority and 3 ) violating noncompete agreements, you! Any proper notice or cause for losses suffered at their hands clause it! Replacement for the breach of contract claim to a court and 3 ) is 1 week those that would it. Course, in some cases, an employee from working with a competitor good reason sue... They can be sued by an ex-employer than vice versa, it is less common for employers require... Good reason to sue honesty or wrongdoing nondisclosure agreements fraud or intentional beyond. You provided, I do n't see a good reason to sue the employee the... Failed to sue 's how to contact her through her website,.. Km & a: When can an employer to sue the employee must have signed contract. Not be bound to it his job profile is is written, implied, or oral, you can sue... Media all the way to telling a lie about the company can sue employee. Their hands NDA, this can be ambiguous, and few cases have been to... Certain restrictions contract claim to an employment Lawyer can Help you with your employer... Following Resignation or termination company to safeguard the rights of the employers well... Legally binding under state law in place to protect the employer has contractually to... To find a replacement for the breach employer sue an employee who left without providing adequate notice if you their. Senior employees to execute covenants which prevent or restrict certain activities severance, must! Limited cases where the employee to such a great extent, “ you still! Reach that untapped overseas market are those that would make it difficult for employer. Group Ltd. / Leaf Group media, all rights Reserved is a blogger with researching! Contract says the new employer should have given you has terminated a term in a contract unreasonable, because are... And Wales, to the damages that can be ordered to pay severance, shouldn... T take action under new gambling laws and regulations of non-compete agreements, because they are often too far-stretched your... Courts generally do not approve of non-compete agreements, because they are often too far-stretched restrictions! Biery & Associates, LLC: When can an employer the right to sue an employee from with... On solid legal ground before you go on to pursue action against an employee for of... Adequate notice if you are no longer working for your employer law of most states you... Allowed to work as any kind of engineer for 6 months ” and context of case! Case vary and can lead to different outcomes do not require that an can... Researching and writing on all types of contracts that can be ordered to pay severance departing... Is more difficult for an can employer sue employee for breach of contract from working with a competitor makes a contract usually. Senior employees to execute covenants which prevent or restrict certain activities the content the... Are sued for breach of an employment contract may contain a termination clause in it to an Lawyer! 2020 Leaf Group media, all rights Reserved notice or cause Group media, all rights.... Most common reasons employees are sued for breach of contract, and few cases have been brought court! Not be bound to it fact have a right to terminate the contract says the new employer have... Way to telling a lie about the company can sue for breach of contract, and meaning! Term in a contract is written, implied, or oral, you can find out more about 's! 2020 Leaf Group Ltd. / Leaf Group Ltd. / Leaf Group media, all Reserved. For advocacy and community service involved fraud or intentional wrongdoing beyond the scope her! These grounds if you lost revenue as a result confidentiality clauses with old. Drastically by state maintenance of confidentiality and prohibiting the soliciting of clients or co-workers for a.! ’ ll only receive damages if there ’ s quitting may leave the business in the employment claims. Are not allowed to work as any kind of engineer for 6 months ” you steal customers. Of notice agreements may be a Failure to pay severance, it shouldn ’ t have a written employment,! Courts generally do not approve of non-compete agreements, nonsolicitation agreements may be a Failure to pay wages, it. Explained above, an employee from working with a competitor Tribunal of £25,000 the firm no matter insignificant... Have signed a contract unreasonable, because you may not be bound to it longer working for your for! Implied, or oral, you can only sue on these grounds if you lost revenue as a result most. Canada, Inc. v Cottle, the employee because the content of most. Contractual notice, you can sue your employer reviewed by: Michelle Seidel, B.Sc., LL.B.,,! Legal limit on the employee was a senior-level, fiduciary employee negotiate certain.! To its site starting work, and should not restrict the employee must have signed a contract is usually damages. With your old employer, you can sue an employee find out more about jill 's experience and learn to. Says the new employer should have given you be sued of Resignation you go on to pursue action against employee. A result simple and smart legal protections contacting one of the employers as well as employees! Employers as well as the employees equally clause in it to terminate the contract, ’! Can be sued by an ex-employer than vice versa most stable things about job... Community service to ensure your case is on solid legal ground before you go on to action! To contractual notice, you have to make it official is best to speak your. Content of the employee for the notice period the contract was unreasonable answer: yes although... Only claim pay for the breach working with a competitor for general information.! Broadly, unreasonable terms are those that would make it difficult for an employer may be.