Contracts - Contractual Termination Date

Originally published May 2010

In the case of Geys v Société Générale, the employer handed an employee a letter which stated that his contract was terminated 'with immediate effect'. The High Court ruled, however, that the contract was only effectively terminated some five weeks later. This was particularly problematic for the employer as, in the interim period, the employee had become entitled to payment of a year-end bonus.

Contractual documentation seemed to entitle the employer to terminate the contract of employment without notice, provided that it made a payment in lieu of notice (PILON). However, as no payment was actually made until five weeks after the employee was handed the termination letter, the court decided that the effective termination date was the payment date.