Posted: Friday 22 July 2011
Notice Pay - Accuracy Essential
I noticed the recent case of Publicis Consultants UK Ltd v O'Farrell UKEAT/0430/10 and thought that it really brings home the message that it is essential that letters dealing with termination issues, particularly financial aspects, are carefully drafted.
Publicis decided to terminate Ms O'Farrell's employment. She was entitled to 3 months' notice but Publicis only gave her 4 days notice.
Following termination, Publicis wrote to Ms O'Farrell stating that they would give her what they termed 'an ex gratia payment representing 3 months' salary'.
Ms O'Farrell brought an employment tribunal claim for breach of contract on the basis that Publicis had failed to pay her notice pay.
The Employment Tribunal upheld her claim, as well as her claim for unfair dismissal. Publicis appealed to the EAT, claiming that the payment termed in their letter as an ex gratia payment was in fact a payment of notice pay. The EAT considered that this was a question of law and that the issue was what interpretation were the EAT entitled to give to the words used by Publicis.
This meant taking the words 'ex gratia' at their ordinary meaning, which meant that the payment representing 3 months' salary was a gift at the discretion of the employer rather than an entitlement of the employee.
Publicis, having chosen to use the words 'ex gratia', could not now argue that they meant anything other than a gift to the employee over and above any entitlements she might have.
A reminder, then, that it is important for employers to state their position accurately and to choose their words carefully, considering what other meanings could be attached to them. This meant that the employer had to pay the employee her notice pay on top of the ex-gratia payment.
So, as I said, this case underlines the need to be very careful what you say in correspondence dealing with termination payments.
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