Dublin has long been known as a key base for tax avoidance by multinational companies, often setting up “brass plate” operations in the International Financial Services Centre (IFSC) and elsewhere in order to channel profits through their “Irish” subsidiaries and thus minimise their tax liabilities. As Jim Stewart of Trinity College Dublin has shown, such operations undermined regulation of the global financial sector as a whole and contributed to the current financial crisis. By Andy Storey.
But it is not just the financial sector that finds Ireland a useful “flag of convenience”. Did you know that all Ryanair aircraft are licensed in Ireland and that all Ryanair staff, regardless of where they work, are hired (via agencies) on Irish contracts? Neither did I, until I read recent research by Geraint Harvey and Peter Turnbull.*
For example, most Ryanair flight crew are employed on Irish contracts through a company called Brookfield International (registered in the UK but based in Gibraltar) and are, technically, self-employed. The contracts stipulate that “the services of the pilot are provided on an as required and/or casual basis” and that “there is no obligation upon Brookfield to locate or offer work”. In effect, these are “zero hours” contracts of the sort that I have previously written about in the context of shop workers and other precariously employed staff.
In the case of cabin crew, absolute “flexibility” is built into the contracts, as they are obliged to work “at such other place or places as the Company reasonably requires for proper fulfilment of your duties and responsibilities . . . This would include . . . transfer to any of . . . the European bases without compensation”. But wherever staff are assigned, their “place of work” (the aircraft) is defined as Ireland.
Ryanair uses these ruses to avoid complying with more “demanding” employment regimes elsewhere. Defending the fact that Ryanair staff in Norway do not pay Norwegian taxes, Chief Executive Michael O’Leary claimed that “Ryanair must comply with Irish law because we’re an Irish airline operating Irish-regulated aircraft, our employees are employed under Irish contracts and we must respect Irish law”.
When the French government sought to oblige the company to comply with French labour laws, Ryanair closed its Marseilles base in 2010 and now serves the French market from non-French bases but with the air crew still employed on Irish contracts. As I write, Ryanair is closing its bases in Denmark in response to trade-union pressure for increased wages, though the Danish market will still be catered to by “Irish” staff based elsewhere.
Despite the fact that the staff concerned are clearly not self-employed in any meaningful sense of the term (contracts state that pilots can only fly for Ryanair), the Irish Revenue Commissioners have accepted this charade as legitimate for taxation purposes.
And the model has been taken up by other airlines also. For example, Norwegian Air Shuttle (NAS) hires its staff via agencies in Thailand and Singapore, but it has a subsidiary company that works under an Irish licence – even though it does not operate out of Ireland. This licence allows it to avoid Nordic labour regulations.
If Dublin is a key hub in this web of labour-undermining schemes, then Brussels (headquarters of the EU) is another. As is Luxembourg, home of the European Court of Justice (ECJ), the legal arm of the EU. The ECJ has repeatedly ruled that the “rights” of employers to sell services anywhere in the EU “single market” override trade unions’ national collective bargaining rights. Thus, Ryanair workers and others cannot appeal to EU authorities for support or protection.
We have recently seen Brussels and Dublin (and Berlin) collude to suppress the democratic rights of the Greek people in the context of the “bail-out” negotiations. But there is nothing new in this – Dublin has long functioned as a crucial “flying column” attacking labour and servicing capital right across an EU that has completely abandoned any vestiges of a so-called “social Europe”.
*”Can Labor Arrest the ‘Sky Pirates’? Transnational Trade Unionism in the European Civil Aviation Industry”, Labor History, volume 56, no. 3, 2015.
This article was originally published in the Dublin Inquirer.