Société Genérale, London Branch v Geys
Mr Geys was employed by Société Genérale, London Branch from February 2005 as a managing director in the bank. Mr Geys' contract of employment provided that:
- either party could terminate his employment on giving three months' written notice; and
- if the bank terminated Mr Geys' employment in certain circumstances, the bank would have to make a termination payment, which included a "compensation payment", calculated by reference to the date on which the employment terminated, and Mr Geys would have to enter into a termination agreement.
The bank's staff handbook contained a payment in lieu of notice (PILON) clause, which reserved the bank's right to terminate Mr Geys' employment at any time with immediate effect by making a payment in lieu of notice (or, if notice had already been given, the balance of his notice period).
Mr Geys was summarily dismissed on 29 November 2007, in breach of the terms of the contract. On 18 December 2007, the bank paid into Mr Geys bank account the correct sums due to him under the PILON clause. On 2 January 2008, Mr Geys' solicitors wrote to the bank saying that Mr Geys had decided to affirm his contract and requested further details of the termination payment. On 4 January 2008, the bank wrote to Mr Geys confirming that it had given notice to terminate his employment with immediate effect on 29 November 2007 and that his PILON had been paid into his bank account on 18 December 2007.
Mr Geys brought claims for wrongful dismissal and breach of contract, asserting that his employment did not terminate until 6 January 2008 (when he was deemed to have received the bank's letter of 4 January), meaning he was entitled to a termination payment of more than €12.5 million.
The bank's case was that the contract was terminated on 29 November 2007, meaning Mr Geys was entitled to a termination payment of no more than €7 million.
The Supreme Court held that, where an employer repudiates a contract of employment, the contract will end only when the employee elects to accept the repudiation (the "elective theory"). The contract does not come to an end immediately on repudiation (the "automatic theory"). Further, Mr Geys' employment did not terminate until he received the bank's letter of 4 January 2008 confirming that it had exercised the PILON clause in