Societe Generale, London Branch v Geys [2012] UKSC 63
Published on: 21/12/2012
Issues Covered:
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Background
The appellant‟s employment was terminated when the respondent employer made a payment in lieu of notice (PILON) into his bank account. The former employee brought proceedings to appeal the decision. The employer cross-appealed and argued that under the terms of the employee‟s contract, his c employment could end after three months' written 12notice. Under section s.8.3 of the staff handbook, the employer could terminate the employee‟s employment at any point after making a PILON. Shortly after being dismissed, the employer lodged a lump sum payment directly into the employee's bank account. The employer sent it‟s former employee a letter which indicated that his contract had ended and explained that the payment made to his bank account was a PILON. The Court of Appeal determined that the making of the PILON was sufficient confirmation that the contract of employment had been terminated. The Court had to decide whether a repudiation of a contract of employment by the express and immediate dismissal automatically terminated the contract, or whether the normal contractual rule should apply i.e. the repudiation had to be accepted by the other party. The court also had the task of determining the actual date the appellant‟s contract terminated. The appeal was allowed. The Court held that a party's repudiation of a contract of employment did not automatically terminate the contract. The contract would only be terminated if and when the other party elected to accept the repudiation. The court decided that the automatic theory failed as it ultimately rewarded the wrongful repudiator of a contract of employment with a date of termination of his choice, to the detriment of the other party. This theory also failed to explain cases where, following an unaccepted wrongful repudiation, provisions which did not survive the termination of the contract had been enforced against the repudiator. The Court considered in length how far the automatic theory may extend. It was held that s.8.3 did not supersede the need to notify the employee of the termination of his employment. The employee must receive his PILON in addition to notification from the employer, in clear and unambiguous terms, that such a payment had been made and that it had been made in order to terminate the contract of employment. If the elective theory rather than the automatic theory had been applied the appellant would have received greater compensation and so in this respect the appellant suffered a loss from his employer‟s mistake. http://bit.ly/UaxgSp
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Disclaimer
The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.
This article is correct at 21/12/2012
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