LONDON (Reuters) - Societe Generale (SOGN.PA) has lost a high-profile lawsuit against a fired London-based investment banker that could cost France’s second-largest bank up to 20 million euros ($26 million).
The UK Supreme Court ruled on Wednesday that Belgian banker Raphael Geys, SocGen’s former managing director of European fixed income sales in London, had been sacked without proper notice in 2007 and was entitled to extra bonus payments.
“The bank could easily have done things properly,” noted Judge Brenda Hale, one of five Supreme Court judges presiding over the case. “But for whatever reason they did not do so.”
Geys, a senior banker who says he was fired for being too successful, will now claim around 12.5 million euros in unpaid severance pay from SocGen. He can also pursue the bank for damages worth “several million euros” more for failing to ensure his bonuses were paid in a tax efficient manner.
In a case that has been closely watched by employers and employment lawyers, the judges ruled by a four-to-one majority that an employment contract can only be terminated without notice after the innocent party accepts that decision.
Employers also have to give staff they sack with immediate effect clear and unequivocal notice that any final payment constitutes a so-called “payment in lieu of notice” (PILON). Therefore, employees do not have to check bank accounts to discover if they remain employed.
“This successful outcome for Mr. Geys vindicates his decision to take his case to the UK’s highest court,” said Tom Custance, a partner at Fox Williams, who was representing Geys.
“The judgment has established several key points of employment law which protect the rights of the innocent party. It should be widely welcomed.”
Geys, whose 20-year career in investment banking includes stints at the London branches of UBS UBSN.VX and Merrill Lynch (BAC.N), was headhunted by SocGen in 2005 although he warned the bank at the time it should consider employing a less senior and less expensive banker.
His bespoke remuneration package, which included an offshore “tax efficient” pay structure he says SocGen never implemented, was designed to persuade him to shelve plans to set up an entrepreneurial business with former Merrill Lynch colleagues.
He says the package was attractive because it was based on an entrepreneurial approach, with a formulaic bonus that could be wiped out if he failed to perform, a tax efficient wrapper and a generous termination deal if things did not work out.
SocGen, he said, never expected him to meet the higher performance criteria.
Reporting by Kirstin Ridley; Editing by Greg Mahlich and Louise Heavens