Ryanair facing huge fines as French court rules on labour case

2nd October 2013, Comments 0 comments

A French court is to rule Wednesday on whether low-cost Irish airline Ryanair breached labour laws and should face tens of millions of euros in fines.

The airline has already said it expects a "negative ruling" in the case and plans to appeal.

Ryanair is facing several charges including registering workers employed in France as Irish employees, preventing workplace councils from functioning and preventing access to unions.

The case centres around a facility operated by the company at Marignane, near the southern French cities of Marseille and Aix-en-Provence.

Ryanair based four planes and 127 employees at the site without applying French labour law or filling out tax declarations in the country.

Prosecutors urged the court in Aix-en-Provence to symbolically confiscate four Boeing 737s based at the site, saying the maximum possible fine of 225,000 euros ($305,000) was "ridiculous" for Ryanair.

If the court agrees, Ryanair would have to pay the equivalent value of the four planes, which when bought new can cost in the range of 50 million euros each.

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.

A lawyer for the SNPL pilots' union, Roland Rappaport, urged the court to "make an example" of Ryanair in its ruling.

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

"Ryanair... expects a negative ruling and a fine in the Aix-en-Provence Court," the company said in a statement.

"We will appeal any such negative ruling (and fine) on the basis that European employment and social security law clearly allows mobile workers on Irish registered aircraft, working for an Irish airline, to pay their taxes and social taxes in Ireland," it said.

Prosecutors argued during the trial that there was no doubt Ryanair was operating in France, given that it had material and staff based permanently at the base and its employees lived in the area.

"We are dealing with a company whose only goal is to counter the law in defiance of the interests of workers," the prosecution said.

Ryanair accused French authorities of pursuing it to protect the interests of French companies including flagship carrier Air France.

It said the court's ruling would be based on a 2006 decree introduced after low-cost airlines began operating in France.

"The 2006 French decree was specifically introduced as further state protection for the loss-making Air France, and to limit competition to high-fare Air France from lower-cost airlines, including Ryanair, easyJet and Cityjet, on French domestic routes," Ryanair said.

The case echoes a similar hearing for 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.

Analysts said a negative ruling would deal a blow to Ryanair, but that with profits in the last fiscal year of 569 million euros, the company would be able to absorb even significant fines.

"The noose is tightening a bit on Ryanair, but it still has a lot of room to manoeuvre," said Yan Derocles, an analyst with Oddo Securities.


© 2013 AFP

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