A former employee described as "a key person" in the success story of computer giant Microsoft had a nervous breakdown after she was "frozen out" of the company's Irish operation, the High Court was told yesterday.

Breda Pickering has taken proceedings against Microsoft Ireland Operations Limited arising from the termination of her employment four years ago. She is claiming damages for alleged negligence, breach of contract and failure to get her redundancy entitlements and stock options. The defence denies her claims. The case before Mr Justice Esmond Smyth is expected to last several days.

Opening the action yesterday, Hugh Mohan SC, with Richard Nesbitt SC, for Ms Pickering, said she had worked with the company for 13 years until, with no notice , her situation had changed in 2001.

She had, at stages, up to 400 employees under her and was managing and executing budgets of some $50 million (€41.6 million).

He said Microsoft operated a system of grading its employees. There was a maximum rating of five out of five and Ms Pickering had never scored less than four. Her role within the company was "seminal".

Although her salary of €134,000 might not appear to reflect the contribution she made, she realised significant sums in stock options and received a car allowance of €20,000 and other benefits, he said.

Mr Mohan said June 1999 marked the beginning of Ms Pickering being "frozen out" of the company. This was when she was told the US and Ireland localisation divisions of Microsoft were being amalgamated. She was initially told she was wanted at the helm of that operation and that she would be responsible for Microsoft's localisation operations worldwide.

Ms Pickering had said she wanted the promotion but had asked if she could do the job while remaining in Ireland. She was told that would be discussed, Mr Mohan said. As far as she was concerned, the position was hers but the location had to be decided. She understood nothing would be done about the position without first reverting to her.

However, in September 2000, another woman secured the position. Ms Pickering was shocked to hear this.

From October 2000 until the end of January 2001, her role and position in Microsoft was "totally undermined" and the mutual trust and confidence between her and her employer had gone. She was "frozen out" of the organisation.

Mr Mohan said she was also told she could not avail of a RIF (reduction in force) package which could have provided a means of reslotting her into another position in the company. It had never before happened in Microsoft that a person could not avail of an RIF, he said. Ms Pickering learned of this in January 2001.

She was left completely isolated and essentially experienced a nervous breakdown, he said. She attended a number of doctors and was told she could take unpaid leave of absence. A replacement was put in for her in March 2001. Her e-mail account was closed in May 2001 and in July 2001, Microsoft told her she should apply for long-term disability. Her employment was terminated in August 2001.