Aer Lingus hit with €32.5m tax bill over ‘leave’ scheme
In November 2008 Aer Lingus had threatened to outsource or make redundant more than 1,300 staff in order to secure €50m in cost savings.
However, after strike threats and crisis talks it agreed a scheme with SIPTU in which workers would receive a redundancy package of nine weeks’ pay per year of service with a minimum payment of €30,000.
The option was also given that workers who accepted the redundancy package would be able to return on inferior terms and conditions — and 715 staff took up that option.
At the time Aer Lingus told staff it had made “every possible effort” to ensure it qualified under the terms provided for in the Redundancy Payment (Amendment) Act 2003.
“In that context we are confident that this will result in a positive outcome to your tax liability should you wish to choose this option,” it told workers at the time.
However, a year later rumblings began to emerge about the legality of the move. When Dublin Airport Authority sought to carry out an almost identical “leave and return” scheme it was told by Revenue that it was not a redundancy because the employees were returning to work for a Dublin Airport Authority subsidiary.
SIPTU, which represented the bulk of the 715 workers, said it would not tolerate any financial penalty being placed on its members for a scheme instigated by airline management.
Yesterday Aer Lingus confirmed it was to make “an exceptional provision of €32.5 million in its financial statements following negotiations with the Irish Revenue Commissioners”.
It added it had set aside the €32.5m because it realised that by disputing an assessment issued by Revenue, the Appeals Commissioner could impose a higher liability if the case were found against the airline.
“Aer Lingus accepts that it gave assurances to staff at the time that any terminations of employment should qualify as legitimate redundancies and that staff members made their decision on the basis that any tax liability in relation to the programme would be limited.” It added: “On this basis, Aer Lingus believes that it is inappropriate to seek to recover any amounts from staff.”
SIPTU said it was satisfied with the company’s confirmation that it does not intend to seek to recover any amounts arising from the plan from SIPTU members.
