The Court of Appeal has revisited the thorny question of the point at which an employment contract terminates for common law purposes. In Societe Generale v Geys the Court overturned the High Court’s decision that termination of employment only became effective when the employee had knowledge of it. The Court held that notification to the employee was irrelevant. This was a contractual issue and the termination was effective when notice monies were paid into the employee’s bank account. It should be noted that for statutory purposes, the effective date of termination is the date on which the employee becomes aware his employment has terminated. For policy reasons, the employee’s knowledge is also critical because that is the date from which time runs when calculating the tight statutory timelines for bringing an employment tribunal claim.
Mr Geys was Managing Director of Societe Generale’s European Fixed Income Sales when, on 29 November 2007, he was told that the bank had decided to terminate his contract with immediate effect. He was told to clear his desk and leave. Mr Geys’s solicitors reserved his rights and requested information about his contractual termination payment (which was stated to be payable if the bank terminated without cause). On 18 December 2007 the bank paid the termination monies direct into Mr Geys’s bank account without informing him. Mr Geys’s solicitors wrote to affirm his contract and the bank responded on 4 January 2008 that they had terminated in accordance with the contract and properly paid the termination sum.
The High Court found that Mr Geys’s contract terminated on 4 January when the bank advised him that termination monies had been paid. Further, it was open to Mr Geys to affirm the contract rather than accept the breach. The Court of Appeal disagreed with the termination date, finding that the payment of the termination monies on 18 December was effective to bring the contract to an end. All that the employer needed to do was to comply with the terms of the contract, which it did by 18 December.
Whilst this decision applies commonsense contractual principles it fails to address the problems with regard to uncertainty arising where an employee is not aware that his employment has properly terminated. The decision has application to contractual issues arising out of the termination date but, as outlined above, knowledge will still be vital for determining the termination date for statutory claims.