AER LINGUS HAS agreed to pay €32.5 million to the Irish Revenue Commissioners.
The money relates to PAYE, PRSI, interest, penalties and related costs arising from payments to 715 staff under its so-called ‘leave and return’ scheme.
Aer Lingus stated:
We are deeply disappointed and frustrated that the Group must now provide for and settle this liability. However, the Group believes that in taking this course of action, the potential financial costs are lessened
In 2008, Aer Lingus proposed to outsource the majority of its Dublin based ground operations, saying they were “uneconomic”, and after discussions with the SIPTU union, agreed on significant restructuring.
In 2009, 913 staff were made redundant and 715 of those employees were re-employed with changed duties and lower salaries.
In 2010, Revenue and the Department of Enterprise Trade & Innovation questioned whether these staff should be considered redundant under the relevant legislation and a review was commenced.
In negotiations yesterday, Revenue confirmed their intention to seek to recover PAYE and PRSI which they considered should have been deducted from termination payments to employees in 2009.
Following the meeting, Aer Lingus decided to make an “exceptional provision of €32.5 million in its financial statements in respect of the likely cost of dealing with this matter”.
Aer Lingus will not be recovering any money from staff.
The company is due to release its 2010 annual results on Monday, 28 February.