Imagine the following situation: it is your day off and you’re enjoying a sunny afternoon at home with your family, when the doorbell rings. Two police officers hand you a search warrant and ask for your permission to enter the house. They start questioning you about your employment status and about your relation to Ryanair. You answer that this is the airline you fly for, the airline whose uniform you wear, and from where the instructions come when and where to fly. Their logo is on the aircraft you operate, it is on the books that you use for being well prepared for your flying duty and your simulator checks.
But is this airline also your employer? No, it’s not. Because you are ‘self-employed’. When you applied to work for Ryanair, you were directed to a UK agency, for example Brookfield or McGinley Aviation, to start the process of establishing your own Limited Liability Company (Ltd.) in Ireland. Together with the UK agency and an Irish based accountant you were parachuted into a shell company with other pilots whom you never meet or interact with. From then on you operate as a self-employed director of an Irish Limited company supplying pilotservices to a UK agency who pass the services back to Ryanair in Ireland while you are based and living in Germany. There are slight variations but all follow the same theme: Ryanair – the Broker (Brookfield or McGinley) – Accountants (Irish or UK) - a Ltd. (usually Irish) – the pilot as the Ltd. Director (with up to 23 other ‘directors’).
Unfortunately, this “creative” form of employment is illegal in the country you live in and where you normally start and end your daily flight duties – as it is in many other countries of the European Union. Now the investigating authorities have two possibilities: they can assume that you are an active participant in this tax evasion scheme, trying to find proof that you are intentionally bogus self-employed, while working uniquely for Ryanair. Or they can investigate transnationally, for example by taking a closer look at the setup of Brookfield, their relation with Ryanair and request information from other European countries that have done so before.
The first possibility is likely to have very negative consequences for you as a pilot: if proven guilty of intentionally being part of this limited company with the consequence of avoiding proper taxation and contributions to social insurance systems, it would constitute a criminal offence. And this would mean that your license could be withdrawn. You would lose the basis of your livelihood!
But do unemployed pilots have a choice? No, they don’t: with an average unemployment rate of airline pilots in Europe of 16,5 % and with not many airlines hiring at the moment, they have to accept any offer – including the conditions and administrative set-ups associated with this offer. After several years without flying, your license will be worthless. But the bank that provided you the 120.000 € you needed for flight-school and the initial type-rating won’t be that patient. They want their money back!
The second possibility, however, would be the fairest way to go: investigating how Ryanair creatively uses the loopholes – generously provided by the European reality. A reality that allows the airline to have pilots fly their aircraft without employing them, and to shift the burden of social and health insurance contributions to their ‘self-employed’ pilots in a way that some national authorities seem to consider illegal. Such an investigation should be keeping an eye on any blind spots, which cover the risky games of Europe’s biggest low-cost carrier.
France and Denmark have been successful in doing so, why shouldn’t Germany? This – by the way – is the country, where all of this has been happening this summer!
by Dirk Polloczek, ECA President