Aviation firm co-founder ousted during sick leave wins €41,000 for unfair dismissal at WRC

An aviation maintenance firm which dismissed one of its co-founders while he was out of work sick following a breakdown in relations at the firm during a €1.2 million pay dispute has been awarded €41,000 at the Workplace Relations Commission (WRC).

Gerry Burke secured the award against Magellan Aviation Services Ltd on foot of a complaint under the Unfair Dismissals Act 1977, following the termination of his employment in August 2023 after 33 years at the firm.

Burke was a co-founder and managing director of the company prior to its acquisition in 2013 by the Tokyo-headquartered Marubeni Corporation, the WRC heard.

Having been paid an “eight-figure” sum for his shareholding, Burke moved to Malta for tax reasons, and stepped down as managing director to a new post as director of special projects, the company’s lawyers submitted.

His base salary in that job was €80,000 – later increased to €88,000 – with health insurance, pension contribution and a contractual provision for a €305,000-a-year bonus, bringing his total annual remuneration to €369,786, his lawyers said.

A preliminary objection by the company submitted that the Unfair Dismissals Act did not apply, arguing that Burke lived in Malta, carried out his work “entirely outside” Ireland, and had his salary paid free of Irish income tax. This argument was rejected.

Microsoft president Brad Smith: Ireland is “well-positioned for future of AI”

Listen |

19:07

The company received tax advice in 2022 that it was unlawful to pay Burke his salary without deducting either Irish or Maltese tax, it was submitted.

It sought to “regularise” the situation with a new contract increasing Burke’s pay and requiring he pay income tax in Malta, but Burke rejected this, the company submitted further.

Burke said in evidence that the allegations of “tax evasion” levelled at him by the firm were “thrown in to discredit [him] and put a cloud over his reputation”. He was “tax-compliant in Ireland and in Malta”, he said.

His position was that he had contacted Marubeni’s compliance department in 2022 with what his lawyers submitted was a protected disclosure concerning the sale of the company, management practices, and certain pay and contract matters, the tribunal was told.

It was Burke’s case that an investigation into the pay and contract matters proceeded first, with a directive issued from Marubeni that Burke receive a 15 per cent pay rise, which was not actioned, his lawyers submitted further.

The company’s managing director, Niall Duggan, said that when he put the proposal to Burke at a meeting in Zurich, the complainant “suggested that he would move to Dubai”.

Duggan added that Burke “intended to sue [the company] if it took action to ensure that it complied with [Malta’s] tax legislation”.

Burke agreed he had threatened an injunction but said that without the firm sharing its tax advice with him, he could not reasonably agree to the company’s plans to establish a company in Malta and make him an employee there.

In 2023, Duggan said, “matters became increasingly fractious”, with Burke initiating a High Court action in Ireland and seeking to escalate the dispute to the leadership of the Marubeni Corporation in Japan.

In March that year, Burke underwent “serious surgery”, his legal team submitted. The actions of Magellan caused him “stress and strain” and delayed his recovery, it was further submitted.

After about five months’ absence due to sick leave, the company terminated Burke’s employment on the basis of disability, the tribunal noted.

There was “an express contractual provision under which an executive is automatically deemed to have a disability following an extended absence from work due to ill-health” in Burke’s employment contract, the adjudication officer noted.

Although Burke sought reinstatement as his preferred remedy for the dismissal, his legal papers calculated his total losses at more than €1.2 million, the WRC recorded.

The WRC noted that Burke had alleged non-payment of salary going back to 2020, and had initiated separate proceedings in the High Court.

Ruling the dismissal unfair, adjudicator Ewa Sobanska wrote: “I cannot accept that other matters, some of them still remaining unresolved, had no impact on the respondent’s decision to dismiss [Burke], Sobanska wrote.

She was not satisfied the termination arose “wholly or mainly” due to any question of Burke’s capability, she wrote.

However, she found she could not order reinstatement on the basis of “fractious relationships” and “tension between the parties”.

Sobanska wrote that €41,434.08, about six months’ base salary, was a “just and equitable” award for the dismissal.

This was because she could not take Burke’s claimed bonus payments into account, and she regarded his efforts to seek new work to be “inadequate”.

Peter O’Brien was for the respondent, instructed by Edward Kelly of Holmes O’Malley Solicitors. Ercus Stewart appeared with Tom McGowan for the complainant, instructed by solicitor Melvyn Hanley.

*This article was amended on 21st of October to make clear that Ercus Stewart appeared with Tom McGowan for the complainant, Gerry Burke, instructed by solicitor Melvyn Hanley and that Peter O’Brien was for the respondent, Magellan Aviation, instructed by Edward Kelly of Holmes O’Malley Solicitors.