Germany: Social Security Issues for Ryanair's Contractor model
 

The country's social security institutions doubt the validity of the 'independent contractor model', claim obvious circumvention of employment laws, and press for payment of applicable contributions, target however not Ryanair but the agencies.

Article in 'Sueddeutsche Zeitung' (in German): Ryanair im Visier - Wirtschaft - Süddeutsche.de

Good, I hope we see many people in this industry behind bars in the years to come for bribery and corruption offences. Both pilots and management.

Should probably add, not only social security is after this model, but also Germany's law enforcement represented by the state attorney, going after agencies AND pilots for tax and social security evasion.

Why the aviation regulator EASA is still mum about these forced (do as we tell you or you won't have a job) fake self-employment constructions is beyond me. They seem so eager to (over-)regulate everything else, but it seems okay to put indentured people (modern day serfs) into the cockpit who have worry about their financial existence with every decision they take that may not be to the liking of those 'contracting' their services. Speaking of Safety Culture.

And this investigation will be an expensive story for the pilots involved.

Yes, but the question should also be: cui bono?

In my mind it should be unacceptable that an AOC holder staffs their planes with crew in that way. Okay perhaps for seasonal gaps, but not acceptable as a general 'employment' model. Some ten years plus ago a national authority in Central Europe still required AOC holders to ask permission in each and every case. Later this requirement was dropped, turns out the head of the country's CAA was/is a shareholder of the nation's leading flight crew leasing company that until recently staffed an entire airline.

Go figure.

Cui bono?

Simple: the pilots and Lufthansa and the german airlines that have regular vertrag...

I am working as a consultant on this matters (side business in order to get out of being a propilot) for few italian CPTS/FOS.

Let me say it clear: pilots are naives. They think that the model "a la RYR" that paid off very well at the end of last century and beginning of this, will be sustainable for the future.

Let me tell you this(if you don't already know): in many countries tax evasion has a statue of limitation of 10 years(10!!!!!).

Social contributions dues are considered taxes in some of these countries.

Some of these gentleman are finding themself in deep **** right know. Some might even face the possibility of imprisonement.

Few might not even claim any damage against contract agencies. (Free advise for everyone: DO NOT SIGN A CONTRACT/AGREEMENT WITCH FORCE YOU INTO ARBITRATION IN CASE OF DISPUTE. Thanks me later)

Tax planning is a very complex matter, requires profesionnal with particular experience and is not for the faint of heart.

Another free advise(I am vey generous today): take whatever number the agency is offering to you and divide it by 2. That's more or less the netto you will get. More is a bonus.

Furthermore, consider this: for tax porpuses is always better direct employement with airlines instead of agencies. The double tax agreement are always very pro direct employement with airlines/ships operators...not so much with agencies....

Take care out there
Arewerunning

Not in Germany, the amount we are talking in those cases isn't high enough (for the pilots).

It would be interesting to see if such a case changes something in tyhe business.