Société General ordered to pay former investment banker EUR 12.5 million
3rd January, 2013
The Supreme Court has ruled that Société General must pay former investment baker, Raphael Geys, 12.5 million euros in compensation for the manner in which it terminated his employment. The court ruled that companies wishing to terminate staff with immediate effect by making a payment in lieu of notice must do so in “clear and unambiguous terms”.
Mr Geys appealed to the Supreme Court against a decision that his contract of employment had been terminated when his employer made a payment of lieu (“PILON”) into his bank account. Mr Geys’s contract of employment provided for three months’ written notice yet Société General’s employee handbook provided that it could terminate his employment at any time with immediate effect by making a PILON. On 29 November 2007, Société General told Mr Geys that his employment was being terminated with immediate effect and he was escorted from the building. On 18 December, Société General paid a substantial sum into Mr Geys’s bank account. On 2 January 2008, Mr Geys’s solicitors wrote to his employer to say that he wished to affirm his contract. On 4 January 2008 Société General wrote to Mr Geys (which he received on 6 January) confirming the details of the termination of his employment and that the payment made into his bank account was a PILON. Société General cross-appealed against the decision that its earlier repudiation of the contract by summarily dismissing him had not automatically terminated the contract.
The Supreme Court upheld Mr Geys’s appeal. It held that a party’s repudiation of a contract of employment did not automatically terminate the contract, and that the contract would only be terminated if and when the other party elected to accept the repudiation. Further, it was held that an employee should not have to check their bank account regularly in order to discover whether they are still employed. Instead, the court said that an employee should receive the PILON along with notification from their employer that the payment had been made and that it had been made with reference to the contractual right to terminate the employment with immediate effect. It was therefore ruled that it was on 6 January 2008 (when Mr Geys received the letter of 4 January) that the contractual right to terminate under the PILON method was validly exercised and his employment was terminated.
This ruling is a stark reminder of the need for businesses to follow correct procedures when terminating employment and our specialist employment solicitors can provide you with advice throughout this process. For further advice or information, please contact Claire Brook by sending an email to [email protected] or via telephone on 01244 405575.