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How might your employees breach their employment contracts?

Apr 11, 2024 | Employment litigation

The foundation of any successful employer-employee relationship is trust. This trust is generally built initially upon a clear understanding of expectations outlined in a legally binding employment contract.

However, even in the most well-defined agreements, situations can arise wherein employees breach these terms. If you’re an employer, exploring common ways this might occur can help you determine when litigation might be the appropriate course of action.

Understanding potential breaches

Employees may unknowingly or intentionally disclose sensitive company information or misuse intellectual property. This could involve:

  • Sharing trade secrets with competitors
  • Using company resources for personal projects
  • Taking confidential data upon leaving the company

Failure to meet agreed-upon performance standards or exhibiting repeated negligence can also constitute a breach. This could include:

  • Missing deadlines consistently
  • Producing work well below expectations
  • Causing damage to company property through carelessness

Contractual agreements often stipulate expected work hours and leave policies. Breaches in this area could involve unauthorized absences, exceeding breaks or working for a competitor during paid hours.

Some contracts include clauses restricting an employee’s ability to work for competitors or solicit clients after leaving the company. Breaching these covenants can be detrimental, particularly in highly specialized fields.

Weighing the options: When is litigation necessary?

When a breach of contract occurs, you should conduct an internal investigation in preparation for legal action. This can allow you to gather evidence to understand the nature and severity of the breach. Was it a one-time incident or a pattern of behavior? Was it intentional or negligent? A thorough investigation may strengthen your case if litigation becomes necessary.

Minor breaches may be best addressed through internal disciplinary procedures or a formal warning. That said, it’s crucial to acknowledge that some breaches are simply too serious to handle outside the courtroom. Examples can include:

  • Theft of company property
  • Disclosure of confidential information
  • Blatant insubordination

These actions can cause significant financial harm and damage the company’s reputation. Litigation might be necessary to recoup those damages.

The decision to pursue litigation demands a careful analysis of the situation. It can help to consider the severity of the breach, the potential financial recovery and the broader message you want to send. Remember, working with a reliable legal team can help ensure you protect your brand’s reputation and to potentially hold delinquent employees accountable for their actions.