pilon confusion

[wayne d]

Hi to all I'm new on this forum as I've been trying to research the legal position on pilon clauses which my former employers view conflicts with the information I've gleaned but I remain unsure. I've just been made redundant and my employer has dismissed me and made a payment in lieu of notice. I'm not confident that the procedure has been followed correctly and so suspect the relevant date is in question. My contact of employment only states "the company reserves the right to pay salary in lieu of your notice whether the notice is given by you or the company". The termination letter says " your employment will terminate on x date. You will not be required to work your three month formal notice period therefore the company will make a payment in lieu of your three month notice. You are entitled to a statutory redundancy payment of x amount, which will be paid with your final instalment of pay". So the clarity I am humbly seeking is thus.
1. Has the pilon clause been invoked properly in the termination letter.
2. Is the relevant date (last day of employment)the date the pilon payment was received or the date notice was served in the termination letter
3. Do I have a position where I could affirm the contract if the company has not properly terminated in accordance with my contract and pilon requirements.

Much of the information which has lead me to suspect wrongful dismissal is case law of Societe Générale vs Geys. Any help appreciated with respect for the time and effort involved with responding. Thank you

Wayne

[Amethyst]

Tagging Ula for you - I think the relevant date is the last day of employment ( so the day on which your notice period ends whether or not you are at work on that day ) so that would be the date for working out redundancy entitlement... but wait for Ula to look in and clarify.

[ULA]

In my view if your contract states "the company reserves the right to pay salary in lieu of your notice whether the notice is given by you or the company”, then this is effectively a PILON clause. This clause allows for the company to terminate your employment immediately without the need to work your notice. Therefore, in answer to your questions:

1. Has the pilon clause been invoked properly in the termination letter.

Yes it has.

2. Is the relevant date (last day of employment) the date the pilon payment was received or the date notice was served in the termination letter.

The relevant date is the date on which your notice period would have expired, had it been given. This is also the date that should be used to assess entitlement to and the amount of statutory redundancy pay

3. Do I have a position where I could affirm the contract if the company has not properly terminated in accordance with my contract and pilon requirements.

Not use what you mean in regard to “affirm the contract.”

[mariefab]

Before this PILON-related letter, did you receive any documentary evidence from your employer confirming that you were made redundant?

[wayne d]

Hi Amethyst Ula & Mariefab. Thanks for your replies. I want to know if the termination letter needs to specifically state that termination of contract is being made by way of the pilon clause in my contract as my reading around the subject especially the case law set down in Societe Générale vs Geys seems to say this is an absolute requirement to spell this out but no other references can be found at least by me. Yes I've been through the whole consultation and selection process as is standard for redundancy. The company say they've paid me up to the termination date stated in the termination notice letter they sent me. The relevant date for the purposes of calculating continuous service if that was at the end of three months (as though I had worked the notice) would have given me another year service. I've been paid 4 years statutory redundancy not 5 which I would have completed if the relevant date was the end of three months notice. My understanding is that a pilon allows termination immediately on either payment of the pilon or otherwise as set out in the wording of the pilon clause . My query was really to find out if payment being received marks the termination date or the date stated in the notice as served (which was a week earlier than the payment arrived in my account)as the wording of the pilon clause does not make it clear. I hadn't considered that the relevant date could possibly be the end of what would have been the notice period. Thanks all I'm hugely grateful for your input any more experience out there? All the best
Wayne

[mariefab]

OK, in Geys the relevant contractual clause stated,

"Your employment can be terminated on the expiry of 3 months' written notice of termination given by you to the Company or by the Company to you."

So, all the employer needed to do was to inform the employee at the start of the notice period that it was using this particular clause to terminate the employment for it to take lawful effect. They didn't, so they lost.

In your case your contract simply states,

"the company reserves the right to pay salary in lieu of your notice whether the notice is given by you or the company".

Note the absence of, the Very Important, first 5 words in the Geys clause.
There's nothing in your clause about terminating your employment.
Your clause simply means that they can elect to simply pay you for your notice period instead or requiring you to work it.

So, the 'relevant date' for the purpose of your redundancy payment is the date on which the notice period ends.
See s.145(2)(a) of the Employment Rights Act 1996 below:

https://www.legislation.gov.uk/ukpga...18/section/145



You say, "Yes I've been through the whole consultation and selection process as is standard for redundancy."

That's fine. But do you have anything in writing from your employer stating that redundancy was the reason for your dismissal.

[wayne d]

Morning Mariefab many thanks for you advice.
My termination letter does state the reason for dismissal as being redundancy for which I had been through a consultation selection and now appeal. The company have said they believe all is above board legally and therefore are not prepared to make any settlement above statutory redundancy and payment in lieu of three months notice. I had suspected that something was amiss. I have told my former employer I believe my contract has not been terminated correctly by spelling out the the contractual terms under which my contract was terminated and that the pilon clause wording does not specify at which point the relevant date is I.e date of notice, date of payment or end of what would have been the notice period. I have told them for this reason I wish to affirm the contract I.e put the contract back in place until they have properly terminated in accordance with contractual requirements. Not sure if this would stand scrutiny legally hence my enquiry but from what you have said there certainly seems to be a case to answer for only paying me 4 years statutory redundancy when if the notice ends at the end of what would have been my three months I will have gained another years service. Have I misunderstood anything? Kind and grateful regards
Wayne

[Amethyst]

Has your employer said they are taking the date notice was given as your relevant date ? ( ie are they only offering you 4 years redundancy payment ?)

Also be useful to know your start date and notice date, end of employment date.

[ULA]

From your posts it seems to be clear that you received a letter confirming dismissal by reason of redundancy having been through a redundancy consultation process. The letter stated the date on which your employment was terminated and that you were being paid PILON therefore the relevant date for you is the date on which the notice period ends. This date is also the date that should be used in assessing your entitlement to redundancy and how much should be paid. Therefore if this relevant date takes you past an anniversary date for either service or age this is the date to use when calculating your entitlement to a statutory redundancy payment, taking into account your start date with the company.

[wayne d]

Hi Amethyst thanks for your reply. The company are treating my last day of employment as the date they say they are terminating my employment in a termination letter. They have stated I'm entitled to 4 years statutory redundancy because as of the stated termination date I've worked 4 years and 9 months and 1 week. So if the correct relevant date is the end of 3 months notice beginning on the stated date of termination I will be within a week of the 5 year redundancy entitlement. The hinge point seems to be the fact that my pilon clause does not say that it terminates the contract with immediate effect. Still unclear if the fact the company did not make it absolutely clear that they were terminating my employment as it's right using a clause in my contract that they have not terminated correctly. If this is the case this would extend dates until it's been done correctly. Thanks
Wayne

[ULA]

I think it may help if you could post the exact wording that deals with your termination (redact any sensitive information) so we can see exactly what was written. Also the date of the letter would be helpful and your start date with the company. Many thanks.

[wayne d]

Hi Ula this is the information you requested which can hopefully give a fuller picture. Let me know if anything else needs to be clarified. Thank you to you and all who have helped me to date it's appreciated. Wayne

Wording of contract of employment
1.This contract will be terminated by either party by giving 3 months notice in writing.
2. The company reserves the right to require you not to attend or undertake any or all of your duties during your notice period provided that you shall be paid your full salary for the notice period.
3.The company reserves the right to terminate this agreement if you commit serious material or persistent breach of company policy or if you are guilty of grave misconduct or willful neglect in the discharge of your duties. In such events summary termination of this agreement and your employment will be served to you in writing.
4. The company reserves the right to pay salary in lieu of your notice whether the notice is given by you or the company.


Termination Letter dated 16 April
Following meeting on x date the company can now confirm the outcome. Your role was put at risk of redundancy and you have been in consultation about this. I can now confirm you have been selected for redundancy. The company has not been able to find alternative work that we can offer you. Your employment will terminate on 19 April 18 you will not be required to work your contractual three month notice period therefore the company will make a payment in lieu of your notice. You are entitled to x amount statutory redundancy payment for your 4 years service and this will be paid in your final instalment of pay. You can appeal this decision in writing within 7 days of receiving this notice.

[ULA]

Your employment terminated on 19 April which means your three month notice period runs to 18 July, therefore for calculation of redundancy payment this is the relevant date that should be used for assessment. If from your start date to 18 July you have worked 5 years or more then your redundancy calculation should be based on 5 complete years of service.

Your contract allows for the company to not have you work your notice and that you shall be paid your salary for the notice period (point 2) and then again at (point 4) reserves the right to PILON whosoever gives the notice. The letter of the 16 April confirms the termination of your employment by way of redundancy confirms the date that will take effect which is the 19 April and then from that date your notice period will be subject to PILON. So that is fine.

However what the company has not recognised is that even though they have paid PILON it does not mean they can exclude this notice period as part of your length of service for redundancy calculation purposes.

[wayne d]

Hi Ula thanks for your advice. I've read a few other bits on the Web that say pilon is dismissal without notice and as a result only statutory notice needs to be added to the termination date to calculate length of continuous service. In my case this would give me 4 weeks statutory (2 weeks for 2 years service plus 1 week for each additional full year). In this scenario I would be short of 5 years total service. Brings me back to the point raised by Mariefab further up the post that my pilon clause does not mention that it terminates the contract and so the relevant date is the end of the 3 month notice period. Any views on my first point I.e using statutory notice added to the termination date to establish the relevant date? Thanks all
Wayne

[Amethyst]

Could you give the actual DATE you started your employment please.