Cathay Pacific has been hit with a christmas present of the special kind. A french court fined the carrier 497,833 EUR for failing to comply with french labor laws concerning the carrier Paris based crews.
The fine consists of a newly levied 190,000 EUR penalty adding to an additional 307,833 EUR retained in an Escrow account since proceedings began.
Cathay Pacific just as many other airlines has a part of their crew stationed in foreign cities for various reasons such as they require locals for on board care in specific languages but also pilots (such as in this case).
Cathay tried to be sneaky, circumventing payments to the french social security system by not formally recognizing their Paris based staff as employed in France but rather in Hong Kong.
Bloomberg Business reported about it on TV and I found a news piece on their website (access here).
Cathay Pacific Airways Ltd. was fined almost 500,000 euros ($547,000) for what a French court termed irregular pay practices concerning pilots operating European routes for the Hong Kong-based airline.
The penalty was imposed after union complaints that crew stationed at Charles de Gaulle airport weren’t being recognized by Cathay as based in France, allowing it to avoid making proper payments into Ursaaf, an organization that collects social security contributions including state health insurance levies.
The fine comprised a penalty of 190,000 euros that had already been paid, plus a further 307,833 euros that had been held in escrow since the case began, the court in Bobigny, near Paris, said Thursday. Cathay Pacific pleaded guilty though fast-track proceedings.“The issues arose from changes to local laws and their interpretation throughout the years” from 1993 when Cathay set up a base in Paris, the carrier said in an e-mailed statement. The company’s arrangements didn’t keep up, it said.
Countries in Europe for the most part have a widespread social security system that requires payment for each employee as part of the welfare benefit distribution these countries have in place. If a company such as Cathay tried to skirt these laws, authorities try to come down hard on them if caught red handed.
These companies have to realize that in Europe there are a different set of rules other than in Hong Kong or wherever else. The same way that financial institutions had to learn the hard way that in the U.S. there are a different set of rules (and penalties) for their industry as well.
Cathay for sure already saves a lot of money by not having to offer this staff adequate housing and benefits in Hong Kong but they tried to squeeze it even more. This is something I’d expect from a Middle East carrier but not Cathay Pacific. All good things come to an end I guess.