Breach of employment contract

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Very often, particularly for senior executives, an employment contract will provide that the employer is entitled to terminate the employment of an employee if the employee commits any serious or persistent breach of the agreement and the breach is not remedied within a particular time (generally 14 or 21 days) of the employee receiving a direction of the company (generally through the board of directors) to do so.
What does the law require for the breach to be remedied? What if the conduct has already occurred? In L Sculer Ag v Wickman Machine Tools Sales Ltd (1974 AC 235), at 249 Lord Reid said, in relation to a clause which provided that a party may determine an agreement if the other shall have committed a material breach of its obligations and shall have failed to remedy it within 60 days:

The question then is what is meant in this context by the words ‘remedy’. It could mean obviate or nullify the effect of a breach so that any damage already done is in some way made good. Or it could mean cure so that matters are put right for the future. I think that the latter is the more natural meaning. The word is commonly used in connection with diseases or ailments and they would normally be said to be remedied if they were cured although no cure can remove the past effect or result of the disease before the cure took place. And in general it can only be in a rare case that any remedy of something that has gone wrong in the performance of a continuing positive obligation will, in addition to putting it right for the future, remove or nullify damage already incurred before the remedy was applied. To restrict the meaning of remedy to cases where all damage past and future can be put right would leave hardly any scope at all for this clause. On the other hand, there are cases where it would seem a misuse of language to say that a breach can be remedied. For example, a breach of clause 14 by disclosure of confidential information could not be said to be remedied by a promise not to do it again”.

The issue was examined recently by the Supreme Court of Western Australia with Justice Le Miere adding
“What the promisee is entitled to require the promisor to do in order to remedy the breach is a question of construction. I think that in cl 14.1(a)(iii) of the employment agreement ‘remedy’ means cure so that matters are put right for the future rather than obviate or nullify the effect of a breach so that any damage already done is in some way made good. I hold that view for the reasons stated by Lord Reid to which I have referred. To restrict the meaning of remedy to cases where all damage past and future can be put right would leave hardly any scope for the opportunity to remedy given by cl 14.1(a)(iii). Most potential serious or persistent breaches of the terms of Mr Heugh’s employment contract could not be remedied in the sense of obviating or nullifying the effect of the breach or breaches.

If the promisee gives a notice which requires certain steps to be taken by the promisor to remedy his breach and the promisor complies with those steps then the promisee will not be entitled to terminate the contract. Whether or not the promisor has complied with the steps required by the promisee is a question of fact. Where the promisee specifies steps to be taken by the promisor to remedy the breach, the promisor may remedy the breach even though he fails to comply with the steps required to be taken by the promisee. Whether or not the promisor has remedied the breach is a question of fact. The promisee cannot limit what might be done by the promisor to remedy the breach by specifying the steps to be taken by the promisor to remedy the breach.

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