Melanie Adams considers how to end an employee’s contract without telling him
Where a contract of employment contains an express contractual right to do so, an employer may lawfully terminate the contract without notice by making a payment in lieu of notice (PILON).
But must the employee be notified that a payment in lieu of notice is being made in order for a PILON clause to take effect and terminate the contract immediately? This was the main issue for resolution in Société Générale v Geys [2011] EWCA Civ 307, [2011] All ER (D) 350 (Mar).
The point was worth €2.5m to the claimant.
Facts of the case
He was employed by the defendant bank in its London branch. A major part of his remuneration package consisted of the bank’s discretionary bonus scheme and fixed income sales scheme.
His contract of employment contained the following clause: “[The bank] reserves the right to terminate your employment at any time with immediate effect by making a payment to you in lieu of notice (or, if notice has already been given, the balance of your notice period)
