SocGen case set for UK Supreme Court

A senior banker who is suing Société Générale, France’s second-largest bank, over a payment of €12.5m which he claims was contractually due to him is to have his case heard by the UK’s highest court this week.

Raphael Geys, SocGen’s former head of European fixed income based in London, brought his case after his contract was terminated at the start of the credit crunch. The Belgian, who had previously held senior positions at UBS and Merrill Lynch, brought the dispute about his entitlements under the terms of his employment contract.

He claimed he had his employment contract terminated in November 2007 and received a draft severance agreement weeks later.

Mr Geys won his case in the High Court in 2010. But the decision was later appealed to the Court of Appeal, which ruled on a number of points in the French bank’s favour including a central issue of when Mr Gey’s contract was terminated – this was found to be in December 2007 rather than January 2008. This had the effect of reducing the amount awarded to him by €2m because the termination payment was calculated on a less favourable basis.

On Wednesday the case will come before the Supreme Court. The hearing is listed for two days but the justices are expected to reserve their ruling for a later date. Mr Geys is being represented by law firm Fox Williams and SocGen is represented by Herbert Smith.

In the High Court in 2010, Judge George Leggatt rejected the bank’s arguments that Mr Geys had “lost any right to receive a termination payment, or any other payment” by pursuing employment-related proceedings.

Court documents produced during his High Court hearing stated that the banker believed he had been dismissed for “being too successful” in his role “because the provisions in his contract were considered by the bank to be too generous”.

Mr Geys, who was paid a basic salary of £150,000, claimed that during his three years at the bank he was responsible for more than doubling the gross revenue of his division from €205m to €440m.

The Supreme Court will have to consider a number of legal issues including whether a “payment in lieu of notice” clause can be effective immediately where the employer does not give notice to the employee that the clause has been exercised.

In the case of Mr Geys, payment in lieu of notice was made into his account in mid- December but he claims he was not aware of this until some weeks later.

The legal wrangle is one of a number of disputes relating to bankers’ severance and bonuses which have reached the courts although this is the first one of its kind to reach the Supreme Court.

In another dispute, Commerzbank was ordered by the High Court earlier this year to pay €50m to 104 bankers who sued in the UK over their claims to a €400m pool announced in 2008 to help retain staff.

The bankers claimed they were promised bonuses ranging from €15,000 to €2m but were later awarded a tenth of the bonuses they expected.

The bankers were all employed by Dresdner Kleinwort in 2008 which was later taken over by Commerzbank at the height of the credit crunch.