Firm claims it can't pay redundancy due to EU sanctions on Russia

Workplace Relations Commission hears employees of Irish subsidiary of a Russian aircraft leasing firm were left 'high and dry'

Avia Capital Leasing — a subsidiary of Russia’s second largest bank, the state-owned VTB Bank — shut down on April 26, 2022. Stock picture: PA

The Irish subsidiary of a Russian aircraft leasing firm has claimed it is unable to pay redundancy to former staff as a result of financial sanctions imposed by the EU following the Russian invasion of Ukraine.

Avia Capital Leasing made the claim before a hearing of the Workplace Relations Commission (WRC) in a case taken by its former technical manager, Anton Gremin, who was seeking redundancy after his employment with an annual salary of almost €72,000 was terminated in April 2022. 

The company is a subsidiary of Russia’s second largest bank, the state-owned VTB, which was subjected to EU financial sanctions.

Mr Gremin told the WRC that there had been some discussion in the company at the time about changes that might take place in relation to the status of employees.

Company closed

He gave evidence that he was informed on April 25, 2022 that his employment was being terminated the following day due to circumstances outside the company’s control.

The WRC heard the company closed completely on April 26, 2022. 

Mr Gremin said the measures had the effect of freezing all the company’s operations, assets, and funds as its parent company was on the list of designated entities covered by the sanctions.

As a result, he said the company was claiming it was unable to make salary and other payments to employees.

Mr Gremin said the sanctions also prohibited individuals and entities from providing any economic benefit for Avia Capital Leasing which meant it was deprived of economic resources and income to pursue its business activities.

Claim of inability to pay

In a written submission, the company said it was willing to pay Mr Gremin his redundancy but had been unable to do so due to the absence of having bank accounts in Ireland, the EU, and US as a result of the sanctions as well as measures adopted by the Federal Financial Supervisory Authority in Germany where its bank accounts are maintained.

Avia Capital Leasing claimed it had approached the Central Bank of Ireland for a licence in order to arrange payment for legal services associated with proceedings before the WRC.

However, it said its application was rejected on the basis that the company does not have any financial resources in Ireland.

For that reason, it claimed it was “simply stuck in a situation” as it was unable to pay Mr Germin his redundancy despite a genuine desire to want to compensate him and other former employees.

WRC adjudication officer, Roger McGrath said it was “an unfortunate situation” that Mr Gremin was one of a number of employees of the company who had been left “high and dry” as a result of the EU-imposed sanctions on Russian businesses following the decision of the Russian government to launch a war against Ukraine.  

Mr McGrath concluded that the company was unable to pay him a redundancy lump sum.

Adjudication officer's ruling

He ruled that Mr Gremin was entitled to a statutory lump sum under the Redundancy Payment Acts based on having almost five years’ service and a gross weekly salary of €1,496 provided he was in insurable employment during the relevant period.

Mr McGrath also ordered Avia Capital Leasing to pay him €2,993 — the equivalent of two weeks’ salary — for not having given him his statutory notice entitlements.

• In separate but related cases before the WRC last year involving other employees of the aircraft leasing firm, the company claimed staff refused to be paid in roubles.

The company’s legal representative said it did not have any accounts in Europe which were not frozen as a result of EU sanctions.