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Breaking the Contract: When employee can’t just walk away

An employee can’t automatically terminate an employment contract by simply rejecting it and walking away from the job – and there can be costly consequences for them if they do.

In a recent case, a highly successful finance broker entered an employment contract for a two-year term. Some months later, in breach of the contract, he began working for a competing company.

His employer successfully obtained a court order to stop him from working for the opposition and then placed him on paid leave while they tried to sort things out. In doing so, the employer elected to continue the finance broker’s employment in accordance with the terms of his contract.

Shortly before the court order expired, the employer directed the employee to return to work. When he didn’t do so, the employer treated this as a final failure to observe the terms of the employment contract and took the case to court seeking compensation.

The employer’s claim was based on a clause in the contract which provided a way the amount of compensation could be calculated if the contract was terminated by the employee’s repudiation of it.

In finding that the employment contract was still in place, and the employer was ready, willing and able to perform its part of the bargain, the court upheld the employer’s claim and ordered the former employee to pay a sum of over $500,000 in addition to the legal costs which had been incurred by the employer in pursuing the case.