Damages for Breach of Fixed Term Employment Contract: A Guide for Employers and Employees

Fixed-term employment contracts are a popular form of agreement between employers and employees. These contracts establish a specific period of time for employment, after which the employment relationship automatically terminates, unless extended or renewed by both parties.

However, sometimes things don`t go according to plan, and one party breaches the terms of the agreement. In such cases, the law provides for damages as a remedy for the wronged party. This article will explore the concept of damages for breach of fixed-term employment contracts, including the types of damages available to both employers and employees.

What is a Breach of Contract?

A breach of contract occurs when one party fails to fulfill their obligations under the terms of a contract. In the context of a fixed-term employment contract, this could happen if the employer or employee ends the contract prematurely or fails to comply with specific terms of the agreement.

For example, an employee might leave their job before the end of the contract period, depriving the employer of their services for the remaining time. Or an employer might terminate an employee without cause, violating the terms of the contract. Any of these scenarios would constitute a breach of the contract.

Types of Damages

When a contract is breached, the wronged party is entitled to damages for the losses they have suffered as a result. In the case of a fixed-term employment contract, the nature and extent of these damages depend on the circumstances of each case.

Compensatory Damages

Compensatory damages are the most common type of damages awarded in breach of contract cases. These damages are intended to compensate the injured party for the loss or harm caused by the breach of contract.

In the context of a fixed-term employment contract, compensatory damages might include:

– Wages and benefits the employee would have received if they had remained employed until the end of the contract period.

– Costs incurred by the employer in finding a replacement for the employee.

– Lost profits or revenue for the employer resulting from the employee`s breach of contract.

Punitive Damages

Punitive damages are awarded to punish the breaching party for their conduct and deter others from engaging in similar behavior in the future. Punitive damages are usually only awarded in cases where the breach of contract was willful or malicious.

Liquidated Damages

Liquidated damages are a predetermined amount of money specified in the contract as the damages that will be awarded if a breach occurs. These damages are often used in fixed-term employment contracts to provide a clear and certain remedy for breach of contract.

Mitigation of Damages

Both employers and employees have a duty to mitigate their damages after a breach of contract. This means they must take reasonable steps to minimize their losses and find alternative solutions.

For example, an employee who is wrongfully terminated from a fixed-term employment contract should make reasonable efforts to find alternative employment and minimize their losses. An employer whose employee breaches the contract should make reasonable efforts to find a replacement as soon as possible.


Damages for breach of fixed-term employment contracts are an essential tool for both employers and employees to protect their interests. Understanding your rights and obligations in these situations is critical to ensuring a fair and just outcome.

As a professional, I hope this article has provided helpful information on the types of damages available in breach of fixed-term employment contracts. For more guidance on legal matters, please consult with a qualified attorney.