In this case, the Court of Appeal upheld both an employment tribunal's and the EAT's decision that a pilot was a worker of a temporary work agency and an agency worker when flying for Ryanair, and not self-employed. He could therefore bring claims for holiday pay and compensation under the Agency Workers Regulations 2010 for not having had the same conditions as a directly employed pilot.
Facts
When the facts of this case arose, pilots flying Ryanair DAC (Ryanair) aircraft fell into two groups. First, pilots directly employed by Ryanair and second a pool of contracted pilots whose services were supplied by an intermediary, MCG Aviation Ltd (MCG). MCG supplied pilots primarily, but not exclusively to Ryanair. Having access to a pool of pilots gave Ryanair flexibility during its busier periods without it having to provide work and pay the pilots when it was less busy.
The Claimant, Mr Lutz, was a contracted pilot based at Stansted and flying Boeing 737s from July 2018. Mr Lutz was required to provide his services via a service company, Dishford Port Ltd ("Dishford"), which was set up by an accountancy firm arranged by MCG. By the time the case was before the Court of Appeal it was accepted that the interposition of Dishford had no effect in law and that the true parties to the relationship were MCG and Mr Lutz.
On 13 January 2020, a dispute about rostering arose between Mr Lutz and Ryanair management and, following a disciplinary process attended by a Ryanair representative, MCG terminated Mr Lutz's contract. Mr Lutz began proceedings in the employment tribunal against Ryanair and MCG, bringing two distinct claims:
- The Holiday Claim: brought against MCG alone, for payment in respect of annual leave accrued at the date of his termination brought under the Civil Aviation (Working Time) Regulations 2004
- The Equal Terms Claim: brought against both MCG and Ryanair, under regulation 5 of the Agency Workers Regulations 2010 ("the AWR") for compensation for not being afforded parity of terms with an employed pilot, particularly for pay and/or annual leave
A preliminary hearing was held to establish whether Mr Lutz had the required status to bring the claims. Mr Lutz successfully argued that he was not a self-employed contractor but was instead either ‘employed’ by MCG as a crew member or as a ‘worker’ and entitled to paid holiday, and that he was also an ‘agency worker’ supplied to work temporarily for Ryanair on the basis that the contract between him and MCG was subject to a fixed term. The tribunal’s decision was upheld by the EAT and the Court of Appeal.
The following factors were key to the decision that Mr Lutz was obliged to provide personal services, and was therefore a worker of MCG:
- Although Mr Lutz's recruitment until the point he was offered a position as a contracted pilot was carried out by Ryanair, the airline was not his employer. The contractual arrangements under which Mr Lutz worked for Ryanair were made explicitly between himself and MCG for providing the services that he did and included express provisions that Ryanair did not employ him.
- Mr Lutz was working subject to Ryanair's direction and control. While flying for Ryanair Mr Lutz was fully integrated as part of the pilot workforce – wearing Ryanair’s uniform, having a Ryanair ID card, taking and being required to pass its competency assessments, operating in line with its operations manuals and guidelines, flying from a base set by Ryanair fixed according to its flight rosters, flying the same hours as employed pilots, swapping shifts through Ryanair's process and booking his annual leave and time off with Ryanair directly, and being subject to Ryanair's disciplinary process (which led to his termination).
- Mr Lutz’s right of substitution was limited in nature, really only amounting to a right to request to swap shifts with another pilot (and such requests were sometimes refused).
- However, given the contractual relationship Mr Lutz had with MCG, there was no need to imply any employment relationship between him and Ryanair.
In considering whether Mr Lutz was an agency worker supplied by MCG to work temporarily under the supervision and direction of Ryanair, it was noted that Mr Lutz had requested that Ryanair employ him directly and they had not. The fact that his contract was for five years, subject to three months' notice, meant it was time limited. Temporary does not only mean short term. The distinction is between employment which is permanent/indefinite, and employment which is finite. Mr Lutz had been supplied to Ryanair to work for a fixed term of five years and he was accordingly a "temporary" worker under the AWR.
What does this mean for employers?
This decision is significant for all employers wishing to engage independent contractors without giving them employment or worker status. The Court of Appeal was at pains to point out that there was nothing unusual about Ryanair being in control of the operational aspects of Mr Lutz's day to day work and this did not convey employment status with Ryanair in circumstances where the contractual arrangements clearly provided that he was engaged as a worker by MCG. The case is also a reminder that temporary, for the purposes of the AWR, does not mean short term.
