A breach of contract by either party entitles the other party to either accept the breach or sue for damages or to reject it and sue for specific performance. A material breach of contract constitutes repudiation where it evinces an intention on the part of the guilty party not to continue with the contract. A breach of a material term constitutes repudiation, whether the term is express, tacit, or incorporated. Repudiation by a party does not itself terminate the contract, it merely gives the innocent party the choice of accepting it and bringing the contract to an end; or rejecting it and seeking an order for specific performance, which effectively declares the contract of full force and effect.
Forms of breach
One needs to distinguish between serious (or fundamental) and less serious forms of breach. Theft and fraud have always constituted good grounds for dismissal as they frequently constitute a fundamental breach of the employment contract. Case law has in the past emphasized, with good reason, the breach of the relationship of trust that occurs where an employee is guilty of such a misdemeanor.
Remedies of the employer
1. Summary dismissal (cancellation of the contract)
Summary dismissal means the termination of the employee’s services without giving notice – the cancellation/termination of the contract. The employer is entitled to terminate/cancel the contract (dismiss the employee) when the employee has committed a material breach of contract.
2. Specific performance
The courts are unlikely to order specific performance against an employee who has breached the contract. Compelling reasons not to enforce specific performance on the part of an employee include disapproval of forced labour, the fact that damages appear to be a sufficient remedy for an employer, and simply a reluctance to interfere with an employee’s right to freely exercise their skills or profession.
An employer is entitled to claim damages from an employee whose behaviour caused them damage.
Remedies of the employee
1. Cancellation of the contract
A material breach of contract by the employer allows the employee to resile from the contract. Examples include a reduction in status, the non-payment of remuneration, etc. Where an employer breaches a material term of the contract, such as not paying an employee which is a material and fundamental term of the contract, the employee has an election. The innocent party has a choice whether to cancel the contract or to uphold the contract and force it. If the employee does not elect to terminate the employment contract by resigning, they will not be entitled to claim constructive dismissal as an essential element of a claim of constructive dismissal will not be present. In order to place an employer in a position to formulate a defense against a claim of constructive dismissal it is therefore, necessary to make a factual allegation in the statement of claim to the effect that it was the employee who had terminated the contract of employment by resigning.
2. Specific performance
Due to the personal nature of a contract of employment, the courts will not order specific performance where a contract was breached.