Ryanair to appeal French ruling after being ordered to pay €8 million in damages

Ryanair will appeal a French ruling imposing €8 million in fines and damages for breaches of local employment law on the airline "all the way to the European courts".

A French court yesterday hit the carrier with the penalties for employing crews on flights to and from its former base at Marignane, near Marseilles , on Irish rather than French contracts.

This meant that they paid tax and social insurance in the Republic rather than in France, where taxes on labour and social insurance charges, including those imposed on employers, are far higher.

The €8 million is mainly made up of damages and interest to French social security, pension and employment agencies and trade unions. The airline must also pay a fine of €200,000.

Rivals' fines
The Irish company had expected the ruling to go against it, but the fines far outweigh those imposed on rivals CityJet and EasyJet in similar cases in 2010 and 2012. They had to pay sums of €1 million to €1.5 million.

Ryanair confirmed yesterday that it would appeal the ruling and pledged to pursue the matter all the way to the European courts.

The airline maintains that as both it and the craft it was using were registered in the Republic, staff operating on the routes in and out of Marignane were employed on Irish contracts and paid their tax and social insurance here. It employed 127 people of varying nationalities when it set up the Marignane base in 2006. It shut the operation four years later when the French authorities began legal action against it.

The agencies and unions that backed the case claimed the set-up was a fiction, arguing that Ryanair’s offices, equipment and management were based at Marignane, and showed its operation was implanted in France and should be subject to French rules.

The court agreed, convicting the airline of “concealed employment”.

According to news agency AFP, the court’s judgment said its operation amounted to “social dumping” and said that the fact that employers’ social insurance charges in the Republic were 10.75 per cent of pay, compared to more than 40 per cent in France, allowed it to compete unfairly.

However, Ryanair said a 2006 French decree that applied French social security charges to foreign airlines was “specifically introduced as further state protection for the lossmaking Air France” against which it and other low-cost airlines were competing.

In a statement yesterday, the airline said there was a clear contradiction between current EU employment rules and the 2006 decree, which it claimed seeks to require airline crews operating in the Republic to pay tax and social insurance in France, despite the fact they had already paid them here.