Murray v Leisureplay Plc [2005] EWCA Civ 963 (Court of Appeal)

Mr Morris was employed as Chief Executive Director. His employer dismissed him with 7 weeks notice. Under the terms of his contract of employment he was to be given 12 months notice or paid 12 months salary in lieu of notice. Mr Murray sought to enforce this clause and the employer argued the clause was unenforceable as a penalty. The trial judge followed the principle in Cine Bes and held that in determining a penalty account had to be taken of Mr. Murray's duty to mitigate his loss and therefore held the clause to be a penalty.

Held:

The clause was not a penalty. The sum may have been generous but was not unconscionable and may have taken into account the difficulty in obtaining alternative work of equal value.

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