Employment Contract

3 Ways to Legally Break an Employment Contract

In general, employment contracts are serious, legally binding documents. They are usually created with the help of employment lawyers to ensure that they are well written and contain provisions for most circumstances.

Despite this, it’s usually possible to legally break an employment contract, both as an employer and as an employee. It’s always worth speaking with a lawyer if you’re not sure about your rights, but we’ve put together a quick list of three ways to legally terminate an employment contract. These include:

  1. By Providing Adequate Notice and Paying Accrued Entitlements

As an employer, you can legally break an employment contract by providing adequate notice and ensuring you pay all outstanding leave and other entitlements. You should speak to employment lawyers and your employer’s guidelines, but the minimum notice periods in Australia are:

  • One week for less than one year of employment.
  • Two weeks for one to three years of employment.
  • Three weeks for three to five years of employment.
  • Four weeks for five or more years of employment.

Note that these are absolute minimums, and there will be situations where more notice is required. For example, if your contract includes information about the amount of notice to be given, you will have to abide by this. Seek legal advice for further information.

Note also that there are two things that could happen here; (1) the employee will continue working until the end of the notice period or (2) the employee will be terminated immediately, but will be paid until the end of the notice period.

  1. By Proving Gross Misconduct or Breach of Contract

In some circumstances, an employer will be able to legally fire an employee with no notice if they can prove gross misconduct or breach of contract. In situations like this, it can be worth hiring an employment lawyer to ensure you’re doing things by the book. Note that you will still have to pay any accrued entitlements in these cases.

Similarly, an employee may terminate a contract and leave with little or no notice if they can prove that the employer has breached the terms of the contract. In situations like this, the employee may be entitled to sue for damages and/or claim other compensation from the employer.

  1. By Activating a Clause Within the Contract

If you were careful when negotiating your contract, you may have been able to include termination clauses that enable you to break it early. These are quite common, but they vary significantly according to industry. It’s therefore worth spending some time thinking about them.

  • Consider hiring an employment lawyer to ensure any termination clauses are properly written and legally binding.
  • Spend some time discussing termination clauses with your future employer/employee before signing a contract.

All things considered, it’s not that hard to break an employment contract in Australia, especially if you’re willing to do things by the book. As long as you follow the conditions set out in your contract and provide an adequate amount of notice – whether as an employer or an employee – you will be fine. If you’re worried, speak to an employment lawyer.