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Ben Jones
Ben Jones, UK Lawyer
Category: UK Employment Law
Satisfied Customers: 48203
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I resigned on 8th Feb 2012. I agreed a termination date of

Customer Question

I resigned on 8th Feb 2012. I agreed a termination date of 2nd March with my manager which he confirmed by email to myself an my team. On 23rd he then asked if I would step down from day to day activities. Following a conversation with HR on 24th Feb and without my agreement my contract was terminated (backdated to 23rd) and they invoked the PILON clause in my contract. This resulted in unpaid (lost) commission of £14k. I don't believe this is lawful and was to solely to avoid payment of commissions. I also had accepted and then started new position to start on 5th March which technically is wrong as the PILON went up to 8th March.
Submitted: 5 years ago.
Category: UK Employment Law
Expert:  Ben Jones replied 5 years ago.
Hello and thank you for your question, which I will be happy to assist you with. Please let me know what is your specific question about this?
Customer: replied 5 years ago.
Can my old employer alter an agreed termination date (being 2nd March) without my agreement which resulted in loss of earnings as they invoked the PILON?
Expert:  Ben Jones replied 5 years ago.
What was your contractual notice that you were supposed to give?
Customer: replied 5 years ago.
I was on 1 months notice. Resigning on 8th Feb I was obliged to give the 1 month but agreed to an early termination of 2nd March - it was in my interest as that ensured I was in employment until the end of our 1st Quarter and I would be entitled to payment of 2 large deals that were forecast for 24th Feb and 29th Feb. These deals have an estimated commission to me of around £14k
Expert:  Ben Jones replied 5 years ago.
Had you been in employment on 24 Feb would you have been paid?
Customer: replied 5 years ago.
In theory I would have been paid for the 1st deal that closed on that date. if I was in employment until 2nd March I would have been paid on the 2nd one as well.
Expert:  Ben Jones replied 5 years ago.
Whilst your employer may have accepted your notice and agreed a specific leaving date, they can still give you counter notice as per your contract and terminate your employment on a different date, as long as it is allowed under the contractual terms.

In this particular case, the employer does have the right to terminate your notice with a PILON and they can rely on that clause to terminate your contract even if a different date was initially agreed. What they cannot do however is backdate this termination date. If they informed you on 24 Feb that they are using the PILON clause to terminate your notice then this will be enforceable from the date such notice was given - 24 Feb. They can't backdate it, unless there is specific wording entitling them to do so. That means that you should at least be paid for the first deal because technically you would have been employed by them on the 24 Feb.

Please press Accept for the advice given so far. If necessary, I can then provide further advice and guidance as required and answer any specific questions you may have. Thank you
Customer: replied 5 years ago.
OK understood. Is their ability to alter a previously agreed termination date an interpretation of the law or very clear cut even when it is obvious they are avoiding commission payment obligations?

Also, the contract states that the company must put the termination and associated PILON in writing. They did this in a letter dated 24th (termination date being 23rd) but I didn't receive it to 27th Feb.

A small but maybe important point is that on the agreement that my termination date was 2nd March I agreed then subsequently started my ne employment on 5th March. Technically I had 2 employments as the PILON had an assumed end date of 8th March.
Expert:  Ben Jones replied 5 years ago.
A PILON terminates the employment immediately, so if it was applied on 24 Feb, the employment would have terminated there and then.
Ben Jones and other UK Employment Law Specialists are ready to help you
Customer: replied 5 years ago.
I understand that

What is you response to

1. whether your answer regarding them altering the date being an interpretation or very clear cut when it's an obvious avoidance of obligations
2. technically 2 employments. I thought HMRC wouldn't be too impressed by the employers use of a PILON

Expert:  Ben Jones replied 5 years ago.
Can you please clarify your second question - why do you think that?
Customer: replied 5 years ago.

I resigned on 8th with an agreed termination of 2nd March. I then agreed a start date with my new employer of 5th March.

My old employer then changes their minds and paid me in lieu of notice to 8th March. Even though they terminated me immediately the underlying and assumed end date was 8th. Although I was paid I also had PAYE deducted as I did with the new employer for the same period and technically I didn't think an employee is able to have PAYE deducted from 2 employers simultaneously
Expert:  Ben Jones replied 5 years ago.
you can certainly have 2, 3 or 10 jobs at once - it is not illegal to have more than one job. The main issue is that you pay the taxes due from all jobs when your total income is taken into consideration. So this is not really an issue here.

As to the other question - this is a contractual issue and clear cut in a way - if there is a clause in the contract allowing them to terminate a contract in a certain way then this can be relied on and applied in order to terminate said contract
Customer: replied 5 years ago.

and a final question

If I have an agreed termination date of 2nd March and then they are allowed to terminate at will should the implied notice period start from that new date? i.e. they changed their minds on 24th Feb should the PILON be up to and including 24th March or as they did and pay me 1 month from my resignation date
Expert:  Ben Jones replied 5 years ago.
What is the exact wording of the PILON clause?
Customer: replied 5 years ago.
The Company reserves the right (in its absolute discretion) to make the Employee a Compensation Payment (as defined below) in lieu of all or any part of any notice of termination of employment which it or the Employee is required to give. 'Compensation Payment' shall mean an amount equal to the daily basic salary only of the Employee (less any required deductions for tax and NI contributions) multiplied by the number of days not worked of the Employee's notice entitlement, which he or she has not received.

The argument is if they at will can bring forward the previously agreed termination date does the Employer pay just for the remaining notice period or do they pay 1 month from the new date.
Expert:  Ben Jones replied 5 years ago.
In these circumstances they will have to pay you for the remainder of your notice period, not a brand new month's notice period.
Customer: replied 5 years ago.
Thank you for the advice

In summary your view is that my only claim is that they backdated the notice period from the 24th to 23rd which they are not allowed to do. therefore the claim is for commission on the sale that happened on 24th Feb

I expect they will argue that my manager spoke to me on the 23rd (as stated in my initial question) and that is why they backdated the termination to 23rd. Not a good argument from them as the contract states it needs to be in writing anyhow
Expert:  Ben Jones replied 5 years ago.
Yes, they should not have backdated your notice and as such you would have still been in employment on 24 Feb. I can't comment on whether you would have been entitled to commission if that was the case however as I do not have sufficient details to provide such advice. I agree it is not a very good argument on their side