Geys v Societe Generale
Citations:  UKSC 63;  1 AC 523;  2 WLR 50;  1 All ER 1061;  ICR 117;  IRLR 122.
The claimant was the defendant’s employee. The parties had a written employment contract, which incorporated further terms included in the defendant’s staff handbook. The handbook contained a term granting the defendant the right to end the contract without notice by making a payment in lieu of notice. It also provided for a ‘termination payment’. The amount of this payment depended on the date the claimant was dismissed.
On 29 November 2007, the defendant summarily dismissed the claimant. This dismissal was a repudiatory breach of contract. On the 18th of December 2007, they made a payment in lieu of notice. The claimant did not see this until the 7th of January 2008, by which point (on the 2nd) he had sent a letter to the defendant purporting to ‘affirm’ the contract. The defendant responded on the 4th of January that it had exercised its right to terminate without notice under the staff handbook.
The claimant sued for damages for breach of contract, and for the termination payment specified in the handbook. He argued that, for the purposes of calculating the termination payment due, the date of termination was the date when he received the letter sent on the 4th of January. The defendant contended that the claimant had been dismissed on the 29th of November, or at the latest on the 18th of December.
- When had the defendant terminated the claimant’s contract?
The Supreme Court held for the claimant. The repudiatory dismissal had not terminated the employment contract, because the claimant affirmed the contract. The defendant was not entitled to rely on the termination right in the handbook without providing the claimant clear and unequivocal notice that it was making a payment in lieu of notice in reliance on that clause. Merely paying the money was insufficient. The bank had not given notice that it was relying on the termination right until it sent the claimant the January 4th letter. This was therefore the date of dismissal.
This Case is Authority For…
A repudiatory breach of contract does not terminate a contract. Rather, the contract is only terminated if and when the innocent party chooses to accept the repudiation. The acceptance must consist of a conscious intention to bring the contract to an end, or doing something inconsistent with the contract continuing.
In the employment context, notice must be clear and unequivocal in order to have effect.