The Labour Court has recommended a number of changes to work practices at Aer Lingus but said the airline should compensate workers for agreeing to reduce holiday leave or if a loss of earnings occurred.

Labour Court chairman Kevin Duffy stopped short of fixing the level of compensation that should be paid to workers. Instead, he said both sides should enter talks "with a view to reaching agreement on a compensation package within four weeks".

"If agreement is not reached, the matter should be referred back to the court for a definitive recommendation," he added.

Mr Duffy's recommendations are aimed at breaking a logjam between Aer Lingus and its trade unions over the introduction of new terms and conditions for existing staff. They followed four day of intensive talks that only concluded at 1.30am on Monday.

Mr Duffy recommended that staff who are entitled to 26 days' annual leave should give up two days. Staff who get between 23 and 25 days' leave should have their entitlement cut by one day.

In terms of time off in lieu, he found that staff not rostered to work on a public holiday should receive one other day off in compensation. They are currently entitled to two days off.

Those who are rostered to work on a public holiday should continue to receive two days in lieu, except for new recruits or those with fewer than five years' service. They would receive double pay and a day in lieu.

Mr Duffy also found that Aer Lingus should be able to establish foreign bases with the pay, terms and conditions of cabin crew decided "with reference to local market conditions".

The court recommended that the company's proposal to introduce a standard working week of 37.5 hours should be accepted. This would exclude the main meal break of the day, but would include a 15-minute morning break. The practice of working through breaks and finishing early, before then beginning to work overtime, is also set to end.

Cabin crew are to have credits for working on days off reduced. A reduction in the number of senior cabin crew working on flights has also been proposed.

In terms of shift pay and roster allowances, the court said further talks were necessary at a local level over the next two weeks.

The recommendations were cautiously welcomed by Aer Lingus and its trade unions. Aer Lingus commercial director Enda Corneille said it was a positive step forward. "It's a complex ruling and there's a lot more work to be done over the next month."

Siptu, which represents 1,800 Aer Lingus workers, said it would consult its shop stewards this week before entering talks. "There's a lot of negotiations still to take place," said national industrial secretary Michael Halpenny.

Impact, which represents cabin crew, also welcomed the recommendations.

"The court agreed that change should be negotiated rather than imposed, and we will continue to engage positively in such negotiations," said Impact's Christina Carney.