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Ryanair told to pay €9m damages by French court

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Ryanair told to pay €9m damages by French court
Ryanair expects to lose the case for alleged breach of French labour laws. Photo: Paolo Margari
14:26 CEST+02:00
A French court hit Ryanair with a €200,000 fine on Wednesday for breaches of French labour laws, and ordered the Irish airline to pay €9 million in damages, but ruled against confiscating four aircraft, despite the demands of prosecutors.

Irish airline Ryanair was ordered to pay nearly €9 million ($13.5 million) in damages after being found guilty of breaching French labour law.

A court in southern France, which also fined the company €200,000, awarded the damages after ruling that Ryanair had illegally registered staff based at Marseille airport in Ireland in order to save money on payroll and other taxes.

The company was also charged with preventing workplace councils from functioning and hampering employees' access to unions.

However even before the verdict was given Ryanair said it expected the French court's ruling to go against it and was already planning to appeal.

In its statement released after the verdict, Ryanair said the ruling, based on a 2006 government decree, went against European Union rules.

"Ryanair believes there is a clear contradiction between current EU employment regulations... and the 2006 French decree, which seeks to require airline crews operating in Ireland to pay social taxes and pension contributions in France, despite the fact that they have already paid them in Ireland," it said.

"Ryanair intends to pursue this appeal all the way to the European Courts," it said, adding that if it is forced to make the payments to French authorities then "the vast majority of these contributions will be reclaimable from the Irish government.

It has accused French authorities of pursuing budget airlines in a bid to protect flagship carrier Air France, which is partially owned by the state, from competition.

If upheld on appeal, the damages will have to be paid to France's social security system, the state pension funds and unions representing airline workers, all of whom were plaintiffs in the action against Ryanair.

The company had said it expected to be handed a hefty fine, but French prosecutors were looking for more.

A prosecutor has pressed for the low-cost airline to be fined €225,000 ($293,000) and for confiscation of four of its planes.

The company could have faced even heavier penalties but the judge rejected a prosecution request for an additional fine equivalent to the value of the four Boeing 737s that the airline had flown out of Marseille between 2007-11.

At the trial in southern France earlier this year, prosecutor Annie Battini said the maximum €225,000 fine faced by Ryanair for charges of "concealing employment" was so low as to be "ridiculous".

She had urged the court therefore also to confiscate four planes which the airline had based at Marignane airport, near Marseille and not far from Aix-en-Provence, from 2007 to 2011.

The trial against Ryanair came after prosecutors charged the airline with several illegal practices including registering workers employed in France as Irish employees, preventing workplace councils from functioning and preventing access to unions.

The civil plaintiffs in the case, who include a pilots' union and a pensions fund, are seeking a further 9.8 million euros in damages.

The case echoes a similar hearing for low-cost carrier easyJet, which in 2010 was ordered to pay more than 1.4 million euros in damages to unions representing crew for hiring 170 employees under British contracts at a Paris airport.

The Ryanair case centred around a facility operated by the company at Marignane, where it had based four planes and 127 employees without applying French labour law or filling out tax declarations in the country.

Ryanair argues that Irish law should have been applied as it did not have a permanent activity in the area and its employees took their orders from headquarters in Dublin.

“Ryanair crews were correctly working under Irish contracts of employment and paying Irish social insurance in accordance with the applicable European employment and social security laws,” the company said this week.

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*An earlier version of this story stated the amount of damages Ryanair had been ordered to pay was €10 million, AFP have since sent out a corrected version of the court ruling, lowering the amount to €9 million.

 

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