The elective and automatic theories of termination at common law: resolving the conundrum?

Under general contractual principles, if one party commits a repudiatory breach of contract, the other party is entitled to either terminate or affirm the contract.1 However, there has been a long-standing debate as to whether the same elective principles apply in relation to the employment contract or whether the law ought to prefer a theory based on automatic termination which posits that one party’s unilateral repudiatory breach operates automatically to bring the contract of employment to an end. Different approaches have been tried and tested in England and Scotland which have resulted in the common law being in an unsatisfactory state as it currently stands. The Supreme Court has the opportunity to bring clarity to this area of the law in the upcoming case of Geys v Société Générale, London Branch which was decided by the Court of Appeal on 30 March 2011.2 Leave to appeal to the Supreme Court was granted on 1 November 2011.