Potential tax implications for RTÉ on Breda O’Keeffe redundancy payment would be minor, lawyer says

The financial consequences for RTÉ of any finding by Revenue that Breda O’Keeffe’s €450,000 redundancy payment in 2020 was not made in accordance with the rules would, at about €11,000, be minor, a prominent employment lawyer has said.

However, the handling of the former chief financial officer’s departure will add to the already substantial reputational damage suffered by the broadcaster, she suggested.

The story of Ms O’Keeffe’s €450,000 redundancy continued to generate widespread criticism on Thursday, the day after RTÉ director general Kevin Bakhurst informed an Oireachtas committee of the scale of the payment involved.

Ms O’Keeffe had originally suggested the broadcaster could make savings of €200,000 by making the CFO role redundant, but this did not happen after the organisation subsequently filled the position.

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On Thursday the broadcaster itself put the potential tax liability arising out of the move at €11,000.

Anne O’Connell, a prominent practitioner in employment law who lectures on the subject at the Law Society, said that while the scale of the overall payment was certainly large, it was not yet clear how much of it was an ex-gratia payment and how much might have been due for contractual or other reasons to Ms O’Keeffe at the time of her departure.

In effect, though, all of these payments would have been subject to tax. While reliefs may have been availed of, these would not create a liability in the event that Revenue concluded the redundancy, which is supposed to relate to the position rather than the person employed in it, had not been genuine.

“The liability would only arise out of the statutory element of the redundancy and that would amount to two weeks’ pay for each year of service plus one week, capped at €600 per week,” said Ms O’Connell.

Ms O’Keeffe was employed by RTÉ for 17 years, according to the broadcaster, seven of them as CFO, but as her weekly pay always far exceeded the €600 cap. Following that formula, the statutory element would have amounted to a little over €21,000. This is the element on which RTÉ now looks likely to have to pay tax.

Ms O’Connell said that where there were multiple breaches of the rules, the sums involved could be very substantial and cited the extreme case in 2011 of a €29.5 million settlement between Aer Lingus and the Revenue over the company’s controversial “leave and return scheme”.

More obviously, she said, the problem for RTÉ was reputational, “the fact that a public body could be doing this”.

Ms O’Connell said it was highly unlikely that Ms O’Keeffe would face any tax liability herself unless it was established that she was responsible for the way in which things had been done.

Asked about the broadcaster’s ability to reveal the amount paid to Rory Coveney when he departed, Ms O’Connell suggested Ms Coveney could sue in the event that any confidentiality clause was broken but that he would have to establish the damage he had suffered.

Ms Bakhurst told Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media Catherine Martin on Thursday that he would seek legal advice on whether he could reveal that and other payments made to departing staff.

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