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Thread: Aer Lingus redundancy scheme - not Revenue approved

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    Default Aer Lingus redundancy scheme - not Revenue approved

    The controversial Redundancy Scheme in 2008 had not received Revenue Approval. The consequence of this, is that many recipients of the payment could face substantial tax bill. I am sure that many of those who opted for this at the time would not have done so if they thought this would happen. Makes you wonder who actually stated that the scheme qualified for Top Slicing Relief and did they even seek Revenue approval.

    RT Business: Revenue queries some Aer Lingus redundancies

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    I wonder who thought up this Hair-brained scheme in the first place.
    This was just a compensation package for a change of terms and conditions .
    Should be fun to watch if you are not a member of cabin crew.
    One presumes the company is going to have to fork out for this.
    I wonder what MOL the holder of 29% is going to say

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    Politics.ie Member cyberianpan's Avatar
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    Aer Lingus tried to give pay cuts to ex state employees... the employees got mad... so a fake redundancy scheme was concocted

    cYp
    "Yawn , am I alive yet ?"

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    Politics.ie Member Libero's Avatar
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    No joke for the employees involved, but all a bit of a laugh when one considers that the Board of Aer Lingus features such luminaries of Official Ireland as David Begg (apparently some sort of trade unionist), Ivor Fitzpatrick (reportedly a solicitor) and Michael Johns (also a solicitor).

    Meanwhile, the Director of "HR and Organisational Change" is one Michael Grealy. However, it's undestandable that Michael may not have realised that the law actually applies to companies he works for, because well before he joined Aer Lingus in 2009, Michael was Head of Group HR at Bank of Ireland.

    (ETA: Grealy only joined Aer Lingus after this arrangement was drafted and put into action. He still has questions to answer though, so long as Aer Lingus stands over its description of what took place.)

    It really is beyond my understanding how any Irish trade union could bring itself to accept that "fire and rehire" (on lower pay) can ever bear the label of redundancy. Even with a redundancy payment involved (or not, as Revenue may decide), that's surely a red line no union can cross for fear of encouraging all sorts of employers to use fake redundancies as a device to override contracted terms and conditions. What has David Begg to say for himself other than mewling like a wet kitten that the redundacies were genuine?
    Last edited by Libero; 7th October 2010 at 07:48 PM.

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    Quote Originally Posted by Libero View Post
    No joke for the employees involved, but all a bit of a laugh when one considers that the Board of Aer Lingus features such luminaries of Official Ireland as David Begg (apparently some sort of trade unionist), Ivor Fitzpatrick (reportedly a solicitor) and Michael Johns (also a solicitor).

    Meanwhile, the Director of "HR and Organisational Change" is one Michael Grealy. However, it's undestandable that Michael may not have realised that the law actually applies to companies he works for, because prior to joining Aer Lingus in 2006, Michael was Head of Group HR at Bank of Ireland.

    It really is beyond my understanding how any Irish trade union could bring itself to accept that "fire and rehire" (on lower pay) can ever bear the label of redundancy. Even with a redundancy payment involved (or not, as Revenue may decide), that's surely a red line no union can cross for fear of encouraging all sorts of employers to use fake redundancies as a device to override contracted terms and conditions. What has David Begg to say for himself other than mewling like a wet kitten that the redundacies were genuine?
    Brilliantly put, Libero.

    How any company could proceed with an unusual scheme like this without written Revenue approval beggars belief.

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    Of course the Revenue can do diddly squat if it holds up in law as an actual redundancy. That is the net point....if it is, then the tax treatment follows. So Revenue may not like it, but imho based on what I have pieced together from the radio, the issue will turn on employment law and not tax law.

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    Apparently they did get legal advice that it was legit. But, to be honest, I wouldn't bet my house on it. If it is legal, then it's a gaping hole in tax/employment law imo.

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    Politics.ie Member gijoe's Avatar
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    Prima facie this 'redundancy' scheme never met the requirements for tax relief or the 60% of Statutory redundancy contribution after the changes made in the light of Irish Ferries. You have to wonder if David Begg et al expected Revenue and the Dept of Enterprise to turn a bit of a blind eye to help them out in pushing this through. And they seem to have been at least partially correct in this assumption until the DAA tried the same trick and pointed to AL when they were not getting their way.

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    Politics.ie Member Libero's Avatar
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    Quote Originally Posted by athlonedub View Post
    Of course the Revenue can do diddly squat if it holds up in law as an actual redundancy. That is the net point....if it is, then the tax treatment follows. So Revenue may not like it, but imho based on what I have pieced together from the radio, the issue will turn on employment law and not tax law.
    Yes, but ultimately that will mean employment law regarding redundancy as interpreted by the superior courts, not by some labour forum set up under a social partnership agreement.

    I'm no expert on employment law, but if a person is "made redundant", but immediately rehired and does largely the same job, how is that a genuine redundancy? Same goes if the person is rehired to another role as part of an overall scheme where another person moves to their old role, i.e. the old role is not extinguished.

    Like laidback said, arguments aside (and even if they manage to win the case) it's positively bonkers that Aer Lingus went ahead with this without written Revenue approval.

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    Making someone supposedly redundant and taking back into same company in similar type role on reduced salary should always be taxable. Otherwise it becomes a way for companies to reward people while not paying tax.

    I don't see revenue backing down on it so going to be lots of tax payabale.

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