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Dismissing and PILON

Posted on 29th January 2013
Must read Case law

The Supreme Court has confirmed the approach that a business should take when making a payment in lieu of notice (PILON) to an employee. Employers need to ensure that when they make a PILON they notify the employee that a PILON is being made to them in exercise of the employer's contractual right to terminate the employment with immediate effect. Simply making the PILON will not be sufficient to bring the contract to an end.

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the employee needed to receive his PILON and notification in clear and unambiguous terms that the payment had been made and was made in the exercise of the contractual right to terminate

Geys v Société Générale, London Branch [2012] UKSC 63


In this case, the employer paid £32,000 into the employee's bank account but did not advise him or his advisers that the payment had been made or what it constituted. The court held that the employee needed to receive not only his PILON but also notification from his employer, in clear and unambiguous terms, that the payment had been made and that it was made in the exercise of the contractual right to terminate the employment with immediate effect. The employee should not be required to check his bank account regularly to discover whether he was still employed.

The significance for Mr Geys was that, because his employment continued, he became entitled to a range of very high value bonuses!

You can read our earlier articles Breach of contract on termination and Payment in lieu of notice terminates contract by clicking on the links.

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