Former PTSB chief claims €866,000 redundancy owed

Former Permanent TSB chief executive David Guinane has claimed he is entitled to a severance payment of more than €866,000 following his departure from the bank in 2012.

He was offered, but refused, a payment of €175,000, plus 11½ months salary, the High Court was told.

In proceedings against PTSB, Mr Guinane, who worked for the bank for more than 25 years, alleges breach of contract and that the bank denied him fair procedures during his departure. He claims he has a contractual right to a payment, estimated at €866,000, under the bank’s voluntary severance scheme. That claim is the key issue in his case, the court heard.

Mr Guinane further claims his reputation was damaged by his former employer, that the bank acted in breach of its duty towards him, and was negligent. He is also claiming damages, including punitive and exemplary damages.

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PTSB denies the claims and pleads that Mr Guinane received what he was entitled to when he was made redundant.

Opening the case on Tuesday, Paul Anthony McDermott SC, with Shane Murphy SC, for Mr Guinane. said his client had been chief executive of Permanent TSB when it was part of the Irish Life & Permanent Group.

Banking separated

After the group was recapitalised by the State for €4 billion in 2011, the banking section was separated from Irish Life under a restructuring. As part of that restructuring, all senior positions in the banking entity were advertised.

This process left Mr Guinane, who had always been highly professional and a dedicated employee, humiliated, counsel said.

Many others in the organisation knew the position of chief executive was advertised before Mr Guinane did, counsel said. Mr Guinane applied for the position in the new bank and went through two interviews, the second of which was “an illusion”.

The position was given to an English banker, Jeremy Masding, in January 2012, counsel said. Mr Guinane "found out by accident" he had not got the job and that Mr Masding had been appointed.

Due to his departure from the bank, Mr Guinane says he was entitled, like other senior employees at PTSB, to a payment under the voluntary severance scheme. Counsel said payments under the scheme were based on the person’s salary and the number of years they worked at the bank.

Mr Guinane was told that, due to recapitalisation of the bank, the Minister for Finance had capped severance payments to senior staff, counsel said.

While Mr Guinane was told any severance payment would have to be approved by the Minister, it appeared from discovery of documents the Minister was never asked about any payment to Mr Guinane, and that the cap seemed to have been decided by the bank itself.

Rejected €175,000

The bank's justification for its initial offer seemed to be based on a media report that severance payments to senior employees at another State-acquired bank had been capped at €175,000. Mr Guinane rejected that offer, which was subsequently withdrawn by the bank, and he informed Irish Life & Permanent chairman Alan Cook that he would take legal action.

Mr Guinane’s case was that Mr Cook had informed him would be “destroyed by the media” if he took legal action, and that “the department would not back down”.

The court was told the bank accepts conversations took place between Mr Cook and Mr Guinane on the dates alleged, but denies Mr Cook made the alleged statements to Mr Guinane.

The bank, represented by Paul Gallagher SC, denies the claims, including the claim Mr Guinane is entitled to a payment under the voluntary severance scheme after he was made redundant.

The case before Ms Justice Leonie Reynolds is listed for eight days.