In yet another case about the employment status of a purported self-employed worker, the Employment Appeal Tribunal (EAT) held in Ryanair DAC and anor v Lutz that the claimant had worker status. Firstly, he was employed by an intermediary company to work as a pilot for Ryanair, and secondly, his five-year contract fell within the meaning of the word “temporarily” under the Agency Worker Regulations.
Basic facts
In addition to its employed pilots, Ryanair used a pool of contracted pilots to fill seasonal gaps. These workers were supplied to Ryanair by MCG Aviation Ltd under five-year, fixed-term contracts. In the case of Mr Lutz, the contract stated that it was between MCG (the “contractor”), Dishford (the “service company”) and Mr Lutz (the “company representative”).
It also stated that the “service company” was engaged as an independent consultant to provide the services of the “company representative” on the terms and conditions set out in the contract. The agreement said that Mr Lutz could provide a substitute to do the work, as long as he met certain conditions.
Mr Lutz brought two claims. The first was against MCG for unpaid accrued annual leave on the basis that, under regulation 3 of the Civil Aviation (Working Time) Regulations 2004 (CAWR), he was a crew member “employed to act as a member of the … flight crew on board a civil aircraft” by MCG.
The second was against both MCG and Ryanair on the basis that he was an agency worker under section 3(1) of the Agency Worker Regulations 2010 (AWR) “to work temporarily for and under the supervision and direction of a hirer” and therefore entitled to the same working and employment conditions as employed pilots.
Ryanair and MCG argued that Mr Lutz was self-employed.
Tribunal decision
The tribunal upheld both claims on the basis that Mr Lutz was not in business on his own account; that Ryanair and MCG were not his clients; that Mr Lutz was not able to alter anything about the arrangements because of a complete imbalance of power between the parties; that the service company he was required to use was a fiction; that the substitution clause in the written agreement was a sham; and that the dominant purpose of the arrangement was for Mr Lutz to provide personal service as a pilot to Ryanair.
Ryanair and MCG appealed.
EAT decision
With regards to the CAWR claim, the EAT followed the decision of the Court of Justice of the European Union in Allonby v Accrington and Rossendale College which held that a tripartite arrangement involving an individual supplied by an agency to provide services to and under the direction of an end user, could give rise to a worker relationship between that individual and the agency. Given the facts found by the tribunal, the EAT concluded that there was an employment relationship between Mr Lutz and MCG.
As for the AWR claims, the EAT found that the tribunal was entitled to conclude that Mr Lutz’s contract was to perform work or services personally. Although a right to substitution existed, the tribunal was correct in taking into account the various restrictions which applied to that right as a result of airline safety regulatory requirements.
Finally, the EAT held that the tribunal was right to conclude that even though Mr Lutz had a five-year, fixed-term contract, this fell within the meaning of the word “temporarily” under regulation 3(1)(a) AWR. Accordingly, the tribunal was correct when it decided that Mr Lutz’s contract could be terminated if a condition was satisfied, rather than an open-ended indefinite arrangement and, as such, was temporary.