State faces €5m bill over ‘bogus redundancy deal’ at Aer Lingus

THE state may have to pay out more than €5 million to Aer Lingus to partly cover the costs of a fire and rehire deal that was labelled a “bogus redundancy scheme” by Public Accounts Committee chairman Bernard Allen.

Appearing before the Dáil committee yesterday, Department of Enterprise secretary general Seán Gorman said the legal position concerning the 1,073 staff who left the airline under a voluntary severance scheme in late 2008 was still under discussion.

Subsequently, 715 staff were re-employed into new roles under significantly different terms and conditions of employment.

Mr Gorman said his department had written to the airline and unions involved while the deal was being negotiated, giving a legally non-binding opinion that, based on the information they had, the 715 staff exits were legitimate redundancies under the Redundancy Payments Acts 1967-2007 and as such, the company was entitled to a state rebate for 60% of the statutory redundancy costs.

He said the normal time taken to decide on such a matter was six months but ongoing legal considerations meant that no pay-out had yet been made concerning the workers, bar 11 cases where payments were made due to an error.

A similar deal, which the Dublin Airport Authority sought to implement for staff transferring from Terminal One to Terminal Two was ruled not to be redundancy under the terms of the act by the Revenue Commissioners. Concerning the Aer Lingus deal, Mr Gorman said no decision had been made by Revenue “to my knowledge.”

The committee also dealt with the Skillnets programme that provides industry-specific training to companies and is funded from the national training fund.

The Comptroller and Auditor General told the PAC that irregularities involving Empower Learning, the former Kilkenny-based training private training company, had cost the exchequer €54,000 directly .

Skillnets received more than €16.5m in public funds in 2009, and €114m since its establishment.

Mr Gorman was questioned closely by Labour’s Roisín Shortall on what need there had been to create another training scheme under his department’s auspices and how its monitoring had been complicated due to its status as a fully state-funded limited liability company, adding was it “a creature” of employers’ group IBEC.

Mr Gorman said Skillnets had been effective in its training role. However, he was strongly criticised by committee members for failing to have information on basic aspects of the company’s structure and staffing.

The committee also heard that the bulk of spend in Enterprise Ireland in 2008 went on administration costs. Fianna Fáil TD Seán Fleming said the costs were “utterly alarming,” adding that he was concerned they could be dealing with a “mini-Fás.”