Court delivers comprehensive victory for Raphael Geys in his claim against his employer Société Générale

The Supreme Court today delivered its Judgment in the claim of Raphael Geys against his former employer, Société Générale. The Judgment is a complete victory for Mr Geys.

Facts

  • Mr Geys was employed by the London Branch of Société Générale under an employment contract with further terms incorporated into it by the Bank’s Staff Handbook.
  • Mr Geys’ employment contract contained a three month notice period to terminate employment and the Staff Handbook contained a payment in lieu of notice (“PILON”) clause entitling the bank to terminate employment with immediate effect by making a payment in lieu of notice.
  • Mr Geys’ contract also contained a clause entitling him to a termination payment in the event that the bank exercised its right under the PILON, such payment to be calculated by reference to when employment terminated.
  • On 29 November 2007, Mr Geys was summarily dismissed without cause in breach of his employment contract. On 18 December 2007 he was paid the amounts due to him under the PILON.  However, the bank did not inform Mr Geys that it had made this payment until it sent him a letter dated 4 January 2008 which Mr Geys received on 6 January 2008.
  • The key issue in this case was when the termination of Mr Geys’ employment took effect – on 29 November 2007 when Mr Geys was summarily dismissed, on 18 December when the PILON was made or on 6 January 2008 when Mr Geys received the bank’s letter of 4 January 2008.

Key points from the Supreme Court’s Judgment:

  • The Bank’s attempt to terminate Mr Geys’ contract with immediate effect and without cause in November 2007 did not bring his contract to an end. The Supreme Court has confirmed that where an employer purports to summarily terminate an employee in breach of contract, the contract does not come to an end unless and until the employee decides to accept the breach/repudiation. This means that an employer cannot, in breach of contract, terminate an employee on a date which suits the employer (for example just before the employee becomes entitled to a bonus payment or salary rise). The Court has made clear that in such circumstances the law should protect the innocent party and not reward the wrongful party.
  • The Bank was not entitled to terminate Mr Geys’ contract by simply paying his notice pay into his bank account. To terminate the contract it had to notify him in clear and unambiguous terms that it was exercising the PILON clause in his contract.     As the Supreme Court said, an employee should not be required to check his bank account to discover if he is still employed. Since the bank did not notify Mr Geys that it had exercised the PILON until January 2008, almost 3 weeks after the payment was made, his contract terminated in 2008 rather than 2007, thereby entitling him to enhanced termination payments worth approximately 2 million Euros.
  • This means that employees are not required to check their bank accounts regularly to see whether they have been dismissed, or to guess at what an unexpected payment into their account may relate to.  It also avoids the potentially very serious consequences of employees being without health and life insurance because, unbeknown to them, their contract has been terminated by their employer exercising a PILON clause (which are commonplace in employment contracts).
  • As a result, Mr Geys is entitled to pursue further claims against the bank for further breaches of his contract which he says occurred before it was terminated.  The Bank had argued that Mr Geys was required to waive those other claims as a condition of his receiving the termination payments.  However, the Court rejected that argument as it would allow the bank to profit from its own wrongdoing.
  • The overall effect of the Supreme Court’s Judgment in financial terms is that Mr Geys is entitled to a termination payment of approximately 12.5 million Euros and is able to now pursue further claims against the Bank amounting to several million Euros.

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