Aer Lingus staff get tax bills after redundancies

TAX bills have been issued to some Aer Lingus staff by the Revenue Commissioners as it believes a controversial 2008 redundancy scheme was not valid.

Both SIPTU and Aer Lingus have insisted that the redundancies were genuine and, therefore, qualify for generous tax relief.

Under the so-called “leave and return” scheme in 2008, almost 1,100 staff left Aer Lingus with generous redundancy packages worth nine weeks pay per year of service. Within weeks, 715 returned to work for the airline, but on lower pay and conditions.

Aer Lingus told staff that it had made “every possible effort” to ensure it qualified under the terms provided for in the Redundancy Payment (Amendment) Act 2003.

However, when Dublin Airport Authority sought to carry out an almost identical “leave and return” scheme in recent weeks it was told by Revenue that it was not a redundancy because the employees were returning to work for a DAA subsidiary. The DAA is appealing the decision.

The Department of Enterprise has not yet decided whether the “leave and return” scheme qualifies as redundancy.

If it decides it does not qualify, Aer Lingus could potentially lose out on millions of euro through a state rebate for part of its redundancy costs and staff would lose out on favourable tax treatment on the money they received.

It then emerged before Christmas that some Aer Lingus staff who had applied for top slicing relief on their redundancy lump sums were told that they did not qualify for redundancy tax treatment, and would have to repay any relief they had received.