Employers: watch out. Trying to pay notice pay as an ex gratia payment could land you in trouble.
That is what happened in the case of Publicis Consultants Uk Ltd v Ms O’Farrell in a case that was heard before the Employment Appeal Tribunal last month.
The issue in dispute was the company’s description of a payment equivalent to three month’s gross salary as an “ex-gratia” payment. She was contractually entitled to three month’s notice monies but was dismissed for reason of redundancy with only four days notice. Although she was paid the ex-gratia monies, a statutory redundancy payment and her holiday monies she sued for, amongst other claims, breach of contract. The employer tried to say that they had effectively paid the notice monies by way of the ex-gratia.