Professional negligence solicitor, Emma Slade considers an appeal court decision that seems likely to be fertile ground for professional negligence claims
The Court of Appeal’s controversial decision in Société Générale –v- Geys seems likely to cause huge confusion for employees and employers alike, with potential for a good sprinkling of professional negligence claims to boot.
Although the case itself was ostensibly about whether or not Mr Geys was entitled to a bonus payment of some €7.9m, the court spent considerable time working out the date his employment actually concluded. Mr Geys claimed that the bonus payment was due during his notice period; the employers argued that it only crystallised after the date of termination of his employment. As such, it was critical for the Court of Appeal to give consideration as to the “effective date of termination” (“EDT”).
In this particular instance, Mr Geys’ contract of employment allowed his employers to terminate his employment and give him a payment in lieu of notice (a ‘PILON’ payment as it is known). Mr Geys was on holiday when his employment was summarily terminated. He did not check his bank account so was not aware of any PILON payment and critically, his employers did not advise Mr Geys that this was indeed a PILON payment until after the bonuses had been called.
The Court of Appeal concluded that on a literal reading of the PILON clause, there was nothing in there that required the employer to give notice to the employee that it intended to exercise the clause. Moreover, once the PILON clause was exercised and payment made, it had the effect of terminating the employment with immediate effect.
This case has resulted in three important principles:
- Only if a contract of employment has a PILON clause can a payment in lieu of notice be made. If there is no such clause, a PILON payment will be in breach of contract and the EDT is at the end of the notice period. This distinction will be important for calculating the limitation period in an Unfair Dismissal claim.
- If a PILON clause is effected, the EDT will be on the date the money is actually paid (not promised).
- Unless the contract of employment says otherwise, there is no obligation on the employer to tell the employee that this is a PILON payment and ultimately, it is up to the employee to work it out
It is this latter issue which is likely to cause the greatest confusion and likely to be the greatest potential cause of professional negligence. This decision may still yet be appealed but either way, care must be taken in determining the type of payment that is being made to determine the limitation period. Mis-calculate a limitation date and a professional negligence claim wont be far behind.
