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Breach of contract on termination

Posted on 6th April 2010
Case law

The High Court held that an employee was not dismissed when the employer told him that he was being summarily dismissed but on a later date when the employer stated that it was exercising its contractual right to dismiss and pay in lieu of notice.

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employment terminated when his employer clarified that his employment was terminating under the payment in lieu of notice provision in his contract

Geys v Société Générale  2010

Please note this article is not the last word!  Read our later artciles Payment in lieu of notice terminates contract and Dismissing and PILON.

Background

Mr Geys was employed under a contract of employment which included a right by his employer to pay him in lieu of notice. His employer called him to a meeting and advised him that his employment was terminating with immediate effect. Subsequently £32,000 (equivalent to his entitlement to payment in lieu of notice) was paid into his bank account. Mr Geys, unclear about the circumstances surrounding his termination, reserved his position. A little over a month later his employer clarified that Mr Geys' employment had been terminated by way of payment in lieu of notice.

The decision

The High Court determined that Mr Geys' employment did not terminate on the date that Mr Geys was told his employment was being terminated summarily. It decided that it terminated when his employer clarified that his employment was terminating under the payment in lieu of notice provision in his contract. Until his employer clarified its position, the termination was in breach of contract and, as Mr Geys did not accept the breach as bringing the contract to an end (but reserved his position), the contract continued.

In practice

This case is unusual. It is rare for employees to seek clarification in these circumstances, but it is an important reminder that employers should be clear in any letter terminating employment that they are doing so under a contractual provision (if that is the case). Failure to do so could postpone the termination date and entitle the employee to additional compensation. This will minimise the risk that any termination is in breach of contract.

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