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or of one of the bank’s divisions. The bank wrote to him on 29 November 2007 stating that his employment was terminated ‘with immediate effect’. This was on the basis that Mr Geys’ contract of employment included a pay in lieu of notice (‘PILON’) clause stating that the bank reserved the right to terminate the employment at any time with immediate effect by making a payment in lieu of notice for the notice period.
Mr Geys wrote to the bank on 7 December 2007 reserving his position. On 18 December 2007 the bank deposited an amount of money into Mr Geys’ bank account and Mr Geys responded on 21 December 2007 by again reserving his position and by a further letter on 2 January 2008 affirming his contract. On 4 January the bank finally wrote to Mr Geys formally terminating his contract under the pay in lieu of notice clause.
The bank argued that Mr Geys’ employment ended either on 29 November 2007 when he was told his employment was being terminated with immediate effect, or on 18 December 2007 when the bank made the payment in lieu of notice.
Mr Geys argued that the first occasion when the bank notified him that it had exercised its right to terminate his employment under the PILON clause was in its letter of 4 January 2008, and that as he had affirmed his contract throughout the intervening period, his employment could not have terminated before this date.
The Supreme Court agreed with Mr Geys and, unfortunately for the bank, another clause in Mr Geys’ contract stated that if his employment terminated before 1 January 2008 he would be entitled to a termination bonus of €7m, but that if his employment terminated on or after 1 January 2008 the termination bonus would increase to €12.5m. The Supreme Court therefore awarded Mr Gey €12.5m plus damages, some £5m more than he had been paid.
It wasn’t a very happy new year for the bank – if only the termination letter had been received in 2007!
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