Airline redundancy deal faces scrutiny
As part of the agreement 1,073 staff exited the company under a voluntary severance scheme.
Subsequently, 715 staff were re-employed into new roles under significantly different terms and conditions of employment, most seeing their wages reduced by up to 20%. Earlier this week SIPTU, which represents the Aer Lingus workers, highlighted concerns that a staff rebate due to them was being reconsidered by department officials.
Delays in correspondence between the airline and the Department of Enterprise are blamed for the failure to yet have a final decision on whether the deal constituted legitimate redundancies under the Redundancy Payments Acts 1967-2007, and as such entitled the airline to a state rebate for 60% of the statutory redundancy costs.
If declared a legitimate redundancy, staff would be eligible to favourable tax treatment of the severance package called ‘top slicing.’
Department officials are concerned over the short time between the redundancies and re-employment and the possibility that the “ground-breaking” decision could set a wider precedent.
New information on the conduct of the redundancies emerged before Christmas and resulted in a re-opening of the Department of Enterprise investigation. The deal was formulated in November 2008 under the auspices of the National Implementation Body.
When the Dublin Airport Authority sought a similar deal for staff transferring from Terminal One to Terminal Two, Revenue told the company these were not redundancies, because the employees were returning to work for a DAA subsidiary.
Last night, an Aer Lingus spokeswoman stated that they “were continuing to engage” with the department and could not confirm whether company executives would be meeting with officials by the end of this week as expected.
In November last at an appearance by Enterprise Department officials at the Public Accounts Committee the agreement was labelled “a bogus redundancy scheme” by PAC chairman Bernard Allen.
Department of Enterprise secretary general Seán Gorman 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.
Mr Allen said he feared that the state may have to pay out more than €5 million to Aer Lingus to partly cover the costs of the deal due to the possibility that the airline could legally prove they had been given the green light initially by the department.
