‘Heads I Win, Tails You Lose’ Contract

Giraud UK Ltd v Smith (2000) IRLR 763

The provision in a contract that failure by the employee to give proper four weeks’ notice would result in a deduction from his final payment equivalent to the number of days short did not represent a genuine pre-estimate of loss but was an unlawful penalty. If the actual loss to the employer turned out to be nil, the employee would still be liable for the whole of the calculated sum, but if the actual loss were greater than the calculable sum, he would be liable for the unlimited balance. The EAT described this as a ‘head I win, tails you lose’ provision.