What is the Effect of a Repudiatory Breach of a Contract of Employment?

Abstract

A long-debated question1 is whether the repudiatory breach of a contract of employment automatically terminates the contract or whether, in line with the general law of contract, termination depends on the election of the innocent party. In most cases, the answer to that question makes no practical difference. Occasionally it does. Geys v Société Générale, London Branch2 was one such case. A higher bonus for the claimant employee of several million euros turned on the answer. In deciding in the claimant’s favour, the Supreme Court (Lord Sumption dissenting) held that the ‘elective’ approach is correct. Like all other contracts, a contract of employment is not automatically terminated by a repudiatory breach. The claimant, Raphael Geys, was an employee of the defendant bank. He was entitled to three months’ notice of dismissal or to dismissal with immediate effect by payment in lieu of notice. On 29 November 2007 he...