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Resigning early cost employee £500,000 bonus advance

The employee in question was paid a £500,000 “bonus advance” which by agreement was repayable if he resigned on or before 31 December 2016.

On the 23 September he gave notice to resign with effect from today’s date. His employer replied saying that his resignation had been accepted and that his employment would end on the 1 January 2017 (thus he would be entitled to keep the bonus).

There followed a second letter from the employer which stated that his final day would be the 31 December (and thus he would not be entitled to keep the bonus). He was advised that the Bonus Advance was due to be repaid by the 7 January 2017.

The Court of Appeal held that that the employer’s clumsily worded resignation acceptance letter did not vary the termination date by agreement and thus the Bonus Advance was due to be repaid. The employee’s argument that it amounted to a penalty clause was rejected.

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