Repudiation Does Not Automatically Terminate Employment Contract, Says UKSC

Geys, a managing director in the London office of Société Générale (SG) was summarily dismissed in November 2007, in breach of the terms of his employment contract. SG did pay an amount into Geys's bank account in lieu of notice in December 2007, but was also obligated to make a 'compensation payment' on termination. If Geys was terminated on or after 31 December 2007, the compensation amount would reflect entitlements arising from 2006 and 2007; if before, it would be assessed at a much lower figure reflecting 2005 and 2006. Geys's solicitors wrote to SC in January 2008 saying that he had decided to affirm the repudiated contract; the bank exercised its contractual termination rights in reply.

The trial judge held that the bank had terminated the contract only once it communicated with Geys in January 2008. The Court of Appeal disagreed, saying that the termination had occurred when the payment in lieu of notice had been made in December 2007. SG argued that termination had occurred in November 2007 when it repudiated the contract. The UK Supreme Court was faced with the question whether repudiation of an employment contract automatically terminates it or whether the traditional contract rule would apply, which provides that a wrongful repudiation is effective...