A NUMBER of Aer Lingus workers who left the company on redundancy terms in 2008, only to return to employment at the airline on lesser terms shortly afterwards have been issued with tax bills by the Revenue Commissioners, who believe the arrangement was not valid.
About 715 Aer Lingus staff availed of the scheme in 2008, with a redundancy package worth nine weeks’ pay per year of service.
They returned to work within weeks on lesser terms and conditions. Siptu, the union representing the staff involved, has said the workers were paid 20 per cent less on rejoining the company.
The redundancy payments qualified for generous tax relief from the State for the staff, while Aer Lingus was able to claim a rebate worth €5 million.
Both Aer Lingus and Siptu have insisted that the redundancies were genuine. Sources put the size of the staff tax rebates at between €20 million and €40 million.
Under the so-called “leave and return” scheme, about 1,100 staff left Aer Lingus in 2008 with redundancy packages. Within weeks, the 715 had returned to work for the airline, which was led by then chief executive Dermot Mannion at the time.
Aer Lingus staff received their redundancy payments even though the Department of Enterprise, Trade and Innovation has not yet formally approved the scheme.
The arrangement was put under the spotlight last October after it emerged that a similar proposal from the Dublin Airport Authority was rebuffed by the Revenue Commissioners.
In a statement issued last night, the Department of Enterprise, Trade and Innovation, which has responsibility in this area, said: “The department continues to engage with Aer Lingus on the redundancy claims submitted by the company.
“The department hopes to be in a position to make a decision shortly. However, there remain some outstanding issues requiring clarification with the company . . .”
A spokesman for Aer Lingus said it remains “in discussions with the department about the validity of the scheme and is awaiting an outcome”.
The Revenue Commissioners declined to comment yesterday.
The unusual redundancy scheme was formulated in November 2008 under the auspices of the National Implementation Body. It was facilitated by the Labour Relations Commission and ratified by the Labour Court.
Aer Lingus has previously said it “remains convinced” the exit of the staff was “legitimate” under the Redundancy Payments Acts 1967–2007.
Siptu has previously said Aer Lingus would have to make up for any losses incurred by its members as a result of this scheme.
