Ms O'Farrell worked for Publicis Consultants UK Ltd in the post of Director. Her contract provided for three months' notice of termination by either party. She was informed of her redundancy by letter of 14 May 2009, the effective date of termination being the day after. She was paid to 18th May and was provided with statutory redundancy pay and holiday pay. The letter also said, "Ex-gratia Payment - You will receive an ex-gratia payment equivalent to three months' salary. This payment amounts to £20,625. The payment is free of Tax and NI deductions."
Ms O'Farrell then claimed that the company was in breach of contract by failing to pay her notice pay. The company argued that the ex-gratia payment was meant to be a notice payment, but the tribunal rejected that argument and found for Ms O'Farrell.
At the company's appeal the Employment Appeal Tribunal held that the issue was how should the ex-gratia clause in the letter to Ms O'Farell be construed. Did the words mean 'we are hereby paying you for your period of notice' or did they mean 'we are hereby paying you a sum other than the monies to which you would be entitled by way of pay in lieu of notice'? To an ordinary reader the letter meant that three payments were to be made. The company was legally obliged to pay two of them, the third was a payment "made freely and not under obligation". Nothing in the language used in the letter of 14th May 2009 suggested that the ex-gratia payment was a payment for a period of notice and no background information put forward changed that position. The tribunal's interpretation of the words ex-gratia was therefore held to be correct and the company's appeal was dismissed.
The contents of this brochure are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.
Thomas Eggar LLP is a limited liability partnership registered in England and Wales under registered number OC326278 whose registered office is at The Corn Exchange, Baffin's Lane, Chichester, West Sussex, PO19 1GE (VAT number 991259583). The word 'partner' refers to a member of the LLP, or an employee or consultant with equivalent standing and qualifications. A list of the members of the LLP is displayed at the above address, together with a list of those non-members who are designated as partners. Regulated by the Solicitors Regulation Authority. Lexcel and Investors in People accredited.
Thomas Eggar LLP is not authorised by the Financial Services Authority. However, we are included on the register maintained by the Financial Services Authority so that we can carry on insurance mediation activity which is broadly the advising on, selling and administering of insurance contracts. This part of our business, including arrangements for complaints and redress if something goes wrong, is regulated by the Solicitors Regulation Authority. The register can be accessed via the Financial Services Authority website. We can also provide certain further limited investment services to clients if those services are incidental to the professional services we have been engaged to provide as solicitors.
Thesis Asset Management plc, our associated financial services company, provides a comprehensive range of investment services and advice. Thesis is owned by members of Thomas Eggar LLP but is independent of and separate to it. No lawyer connected with Thomas Eggar LLP provides services through Thesis as a practicing lawyer regulated by the Solicitors Regulation Authority. Thesis is authorised and regulated by the Financial Services Authority. Thesis has its own framework of investor protection and professional indemnity cover but Thesis clients do not enjoy the statutory protection of solicitors' clients.