What Is an Employment Contract? An employment contract sets out the terms and obligations of both the employer and employee. If one of these parties breaches the contract, the other party can sue for damages. Damages refer to a sum of money used to compensate a party for the loss suffered as a result of the breach of contract.
How Are Damages Computed in Employment Contracts?The damages awarded for breaching an employment contract typically are referred to as expectation damages. Expectation damages are awarded to compensate for the ¿loss of the bargain.¿ The ¿loss of the bargain¿ refers to the profit that the injured party would have realized if the contract had been performed. How expectation damages are computed depends on who is suing for breach of contract: - Employer suing employee ¿ The typical situation is where an employee quits his job but the employer feels the employee still owes certain obligations. If the employer wins, he will be granted damages for the value of the obligations that the employee still owes plus the costs of finding a replacement.
- Employee suing employer ¿ This is quite common when an employee feels wrongfully terminated by the employer. If the employee wins, she will be granted damages for lost salary that she would have otherwise earned on the job.
Are There other Types of Recoverable Damages?Even if expectation damages aren¿t recoverable, the party who suffered a loss can still recover other types of damages. Some of the more typical ones include:- Consequential damages
- Liquidated damages
- Nominal damages
- Specific Performance
Are There any Limitations to My Recovery of Damages?Several limitations apply to recovery of damages for an employment contract: - At will employment ¿ if an employer hires an employee at will, the employer can fire the employee for any nondiscriminatory reason without being liable for any damages.
- Foreseeable damages ¿ The breaching party must be able to foresee that the damages will likely occur. For example, an employee breaches a contract and leaves work. Having to hire a replacement is a foreseeable cost that the employee would be liable for.
- Certainty ¿ Damages must be proven with certainty. For example, claiming you suffered emotional distress because you were fired from your dream job is not measurable. As a result, no damages are likely to be awarded.
- Duty to mitigate ¿ The party who suffered the loss has a duty not to amplify that loss. For example, an employee who is wrongfully fired can recover damages for lost salary. The employee, however, cannot sit around for two years and then sue for two years worth of salary. The duty to mitigate requires the employee to sincerely look for a job after being fired to minimize the damages.
Do I Need a Lawyer for My Breach of Employee Contract Claim?If you think you are entitled to damages, an experienced employment attorney can help you recover damages. If you are being sued for damages, an employment lawyer can help you mount an effective defense. |
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