By Kirstin Ridley
LONDON Dec 19 Societe Generale 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 and Merrill Lynch
, 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