Saturday 20 January 2018

Aer Lingus workers face pay-off tax bill in redundancy row

WRANGLE: Staff who were let go were then re-employed

HUNDREDS of Aer Lingus workers who took a "leave and return" redundancy may have to pay thousands of euro each to the Revenue Commissioners on their "tax free" lump sum.

A major question mark today hung over whether 715 staff who left the airline with generous redundancy packages two years ago were actually made redundant.

They were offered payments from €30,000 up to around €140,000 in the deal, but most were then re-employed by the airline on lesser terms and conditions.

The deal had huge implications for the taxpayer, with the airline entitled to a State rebate for part of its redundancy costs, which could run into millions.

Two years on, the Department of Enterprise, Trade and Innovation has still not decided whether the Aer Lingus scheme qualified as redundancies.

It is understood that lawyers representing the airline advised at the time that the "leave and return" scheme absolutely qualified as redundancies.

Eamon O'Cuiv, Minister for Social Protection, admitted today he was "surprised" from his knowledge of redundancy that such an arrangement could be legal, but he said he expected to be fully briefed on it later.

The company rebate and the tax elements would affect the State, he said.


Both Aer Lingus and the Revenue Commissioners refused to comment today when contacted by the Herald.

There was no immediate comment from SIPTU, which represented Aer Lingus workers covered by the deal.

Aer Lingus and SIPTU have insisted that the redundancies were genuine. If it qualified as a genuine redundancy, staff would also get favourable tax treatment of the package called "top slicing."

The issue came to light when the Dublin Airport Authority sought a similiar deal for staff transferring from Terminal One to Terminal Two.

The Revenue Commissioners told them that was not a redundancy because the employees were returning to work for a DAA subsidiary.

Reports today said "some" of the Aer Lingus staff may have to repay part of their lump sum.

Tax expert Stuart Meharg told the Herald that, at the time the Aer Lingus deal was announced he "could not see how it (the deal) would work" without there being tax implications.

However, he said there could be details in the deal that were not made public that "made it acceptable" from a tax point of view.

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