Pilon Clauses: No Clawback For Misconduct

Cavenagh v William Evans Ltd [2012] EWCA Civ 697

The Court of Appeal has held that an employee who had his employment terminated on the basis that he would receive a payment in lieu of notice remained entitled to the payment, even though his employer had later discovered his gross misconduct was sufficient to warrant summary dismissal.

Facts

Having confirmed that it would make a payment in lieu of notice, the employer subsequently discovered Mr Cavenagh's gross misconduct and decided not to honour its agreement to pay him in lieu, arguing that it was discharged from its obligation to do so in light of the misconduct that had been discovered. 

The County Court dismissed Mr Cavenagh's claim for recovery of his notice pay as a debt. It did so on the basis that the prior gross misconduct gave the company a complete defence to the claim.