The Labour Court has recommended that staff at Aer Lingus be compensated for planned changes to work practices.
The court said the company had broken "the spirit and the letter" of collective agreements with trade unions
However, it said it was satisfied the company needed to make further cost savings and made a number of far-reaching recommendations that would facilitate such moves by the airline.
Labour Court
In recommendations issued today, the Labour Court said the parties could "usefully put in place new structures" for a "partnership approach" to managing change.
Aer Lingus, which floated on the stock exchange last September, sought to introduce new terms of employment for recently recruited employees, claiming it needed to cut costs at the company.
The so-called Programme for Continuous Improvement (PCI-07) which was the subject of the dispute, contained proposals for "significant diminution in established conditions of employment", the Labour Court said.
"The Court is fully cognisant of the difficulties which these proposals cause for the staff of the airline and their trade unions, particularly against the background of the commitments given in the agreement preceding the IPO [initial public offering] and the various restructuring agreements previously concluded," it stated.
"Nonetheless, the Court is satisfied that the current circumstances of the company are such as to warrant the implementation of measures which will bring about further cost savings and efficiencies."
"The Court does, however, believe that where holidays are relinquished, or where a loss of earnings accrue in direct consequence of the implementation of the recommendations which follow, fair and reasonable compensation should be paid."
The body said it did not intend to fix the level of compensation at this time but said the parties should engage in a process of negotiation with a view to reaching agreement on a compensation package within four weeks. If agreement is not reached by that time, the matter should be referred back to the Labour Court for a "definitive recommendation", it said.
The Labour Court said staff who are entitled to 26 or more days of annual leave should relinquish two days, while staff with 23, 24 or 25 days should relinquish one day.
It also recommends that the company's proposal for a standard working week of 37.5 hours should be accepted. This is to exclude a main meal break and is inclusive of a morning break of 15 minutes.
The Labour Court also recommends that Aer Lingus's proposals for pro-rata pension contributions for those working less than standard full-time hours should be accepted.
Aer Lingus chief executive Dermot Mannion
Changes to staffing levels of cabin crew on some of the fleet's Airbus A321 and A330 services were also recommended.
Siptu's national industrial secretary, Michael Halpenny, said the union would give the Labour Court recommendation full consideration. He said its disputes committee would meet later today to discuss the document.
In a statement, Aer Lingus said it noted the recommendations on the company's proposed Programme for Continuous Improvement, which it said addresses the "uncompetitive work practices threatening Aer Lingus's ability to maintain growth as an independent and profitable company".
Aer Lingus chief executive Dermot Mannion said: "Good progress has been made over the past week towards eradicating the uncompetitive work practices that are leading to increased staff costs per passenger.
"Much remains to be done and management remains committed to addressing the real commercial issues that the company faces and ensuring unnecessary cost is removed from the business.
"We welcome the input of the Labour Court into this process and look forward to the resolution of all outstanding issues in a timely manner," he said.