Société Genérale, London Branch v Geys 2011 EWCA Civ 307

On 29 November 2007 the Bank told Mr Geys that it was terminating his employment with immediate effect.  He was sent a draft termination agreement and advised he would be contacted separately about other matters including his notice pay.  Without explanation or notice the Bank paid £32,000 into his bank account on 18 December.  On 2 January 2008 Mr Geys told the Bank that he was affirming his contract and reserved his position in relation to the acceptance of the £32,000 until the Bank had explained what it represented.  Several days later the Bank told Mr Geys that his employment had been terminated with immediate effect from 29 November and that the £32,000 was a PILON.  The High Court held that his employment terminated on 4 January when he received unequivocal confirmation from the Bank that the £32,000 was a pay in lieu of notice.   

The Bank appealed to the Court of Appeal which allowed the appeal.  It held that his contract was terminated on the date that a payment was paid into his bank account, that is on 18 December 2007 under the terms of the PILON clause in his contract, despite him not being aware of the payment for some time. There was no scope to imply a term that his notice could only take effect once an employee was told his employer was exercising its right to make such a payment.   

Key point:  This is not a helpful case for employees.  To avoid similar issues, employers should tell employees that they are being dismissed with a PILON and then make the payment forthwith i.e. on the same day.  PILON clauses in the contract should also reflect the relevant procedure.