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24 May 2012
Court of Appeal (Civil Division)
Mummery, Hallett and Tomlinson LJJ
Once an employer has decided to terminate someone's employment with a payment in lieu of notice under a term in the contract of employment, it cannot then withhold payment when it later discovers that the employee was guilty of gross misconduct which would have justified dismissal without notice.
EWL dismissed its managing director, C, in a company restructure. C was informed in his dismissal letter that he was to be dismissed with immediate effect but would receive a payment in lieu of notice in accordance with his contract of employment. Before making the payment, EWL discovered that C had wrongly diverted company funds into his pension scheme. It refused therefore to make the payment.
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