LONDON (Reuters) - Societe Generale (SOGN.PA) has lost a high-profile lawsuit against a 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 for European fixed income sales, had been fired without proper notice in 2007 and was entitled to extra bonus payments.
Geys, a senior banker who says he was asked to leave because he was too successful, will now claim around 12.5 million euros in unpaid severance pay from SocGen. He can also now pursue the bank for “several million euros” 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 summarily sack clear and unequivocal notice that any final payment constitutes a so-called “payment in lieu of notice” (PILON). Therefore, staff do not have to check bank accounts for payments that might constitute a PILON.
“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.
Reporting by Kirstin Ridley; Editing by Huw Jones and Greg Mahlich