In Publicis Consultants UK Ltd v O'Farrell
UKEAT/0430/10, Ms O'Farrell was dismissed on less
than her contractual notice period of three months. However, she
received a severance payment which included a payment described in
her termination letter as an "ex gratia payment equivalent to
three months' salary". She then brought a breach of
contract claim in relation to the failure to give her her
contractual notice.
The Employment Appeal Tribunal found that the payment was truly
"ex gratia" and did not represent pay in lieu of her
notice. It noted that Ms O'Farrell's contract of employment
did not include a right for the employer to make a payment in lieu
of notice and the court found that the words that the parties had
used were clear – nothing suggested that the company was
obliged to make the payment or that any other construction of the
words should be applied in the circumstances. She was therefore
entitled to bring a claim for a further three months' pay in
lieu
