By Jean-Francois Rosnoblet
AIX-EN-PROVENCE, France (Reuters) - A French court imposed 10 million euros (8.3 million pounds) of fines and damages on Ryanair on Wednesday for labour law breaches and the airline said it would appeal to European courts.
The ruling, linked to the treatment of local workers hired on foreign contracts, came days after Ryanair unveiled plans to overhaul an "abrupt" corporate culture and ease a reputation for treating customers badly.
"By refusing to submit to French law... Ryanair managed to dump its social costs, which in turn allowed it to reduce its operating expenses, particularly those relating to staff," the prosecutor said in the ruling by a court in southern France.
Ryanair was ordered to pay 200,000 euros of fines and more than 9 million euros in backdated social charges and pension contributions for using Irish-registered workers at its Marseille transport hub between 2007 and 2010, the court said.
The penalty was less than prosecutors wanted, which amounted to the value of the four Boeing 737s stationed in Marseille.
The Dublin-based airline argued that by posting Irish-registered employees in France, it was complying with European Union rules on the employment of mobile workers. It said there was a contradiction between its current practice and French law.
"Ryanair believes this contradiction can ultimately only be resolved by the European Courts upholding EU regulations on the employment of mobile transport workers, and Ryanair intends to pursue this appeal all the way to the European Courts," it said.
It would reclaim any funds it was forced to pay to France from the Irish government, it added.
Ryanair has suffered negative publicity in France over the Marseille dispute even as it remained the country's 3rd largest airline, with more than 3 million passengers in 2010.
The dispute centres on the airline's practice of hiring workers in Ireland and posting them to France, where the court said it had failed to pay high social fees and other labour charges. The carrier was also found guilty of impeding the activities of trade union and works councils.
The court's ruling also mentioned Ryanair's practice of drawing public subsidies in regions surrounding its air transport hubs, typically secondary airports far from major urban centres which allow it to save money on airport taxes.
"This will serve as a reminder to all those who pay big subsidies to Ryanair that they can no longer support illegal activity," said Claire Hocquet, a lawyer for the SNPL pilots' union. Public bodies that continue to subsidise Ryan could be "called to order," she added.
The ruling against Ryanair, not the first airline punished for labour violations in France, highlights tension between protective local employment law and EU rules on labour mobility.
The European Union's 2006 "services directive" grants firms considerable leeway to post employees to work in other member states, though many professional sectors are excluded.
Ryanair has since shut its permanent Marseille hub and operated only a summer operation since April, 2011.
(Reporting by Jean-Francois Rosnoblet and Padraic Halpin in Dublin; Writing by Nicholas Vinocur; editing by Tom Heneghan and Patrick Lannin)