If an employee leaves without giving their employer the notice they should there is a breach of contract and the employer can claim damages from their now ex-employee.
In an SME context, although not an uncommon situation, the amounts involved usually mean claims are not pursued. Cases with people who work in the City are more likely to go to Court. One recent case illustrates what can happen when an employee leaves without giving the employer the amount of notice they should give or, as in this case, without giving any notice at all.
The amount of the employer’s claim was calculated on the assumption that the employee would have given 6 months’ notice and left at the earliest opportunity he could without breaking his contract. The employer was entitled to claim the difference between its actual financial position at the end of that period and what it would have been if there hadn’t been a breach.
The mirror image is when an employee is dismissed without sufficient notice. The employer is normally liable to pay them at most whatever they would have earned in the notice period. The employee is expected to mitigate their loss by seeking alternative employment and if they are successful the employer may end up paying less.
When an employee leaves the employer is clearly better off to the amount it would have paid the employee during their notice period. The question is whether it can show it has suffered any loss in excess of that saving?
Each case will depend on the circumstances. The loss of a particularly poor employee may even benefit the employer. Other employees can be replaced without difficulty so that there is no financial loss for the employer.
The recent case concerned an employee who was head of a broking company’s Swiss francs forward desk with a salary of about £158,000. The court decided that although he had wrongly terminated his contract of employment the company had failed to show that any loss had resulted. The employee was a good broker and would have earned some commissions for his employer in the period but after deducting his additional overhead costs, salary, benefits and expenses there was no profit. Accordingly, the employer’s claim for loss of profit during the notice period failed.
BGC Capital Markets (Switzerland) LLC v Rees and others
