Significant ! Pilot Wins Employment Status Challenge Against Ryanair As Court Upheld a Decision He Was An Agency Worker For Ryanair.

In a development, that might affected the employment status of pilots in the Aviation industry , the Employment Appeal Judge Heather Williams upheld a decision that Jason Lutz was an agency worker for Ryanair, rather than a self-employed contractor as the parties had intended. As an engaged worker, Mr Lutz had accrued certain employment rights.

An Employment Appeal Tribunal has handed down the attached judgment in the case of Lutz v Ryanair & Storm Global (formerly MCG Aviation), It read,

The Employment Appeal Tribunal (“EAT”) dismissed Ryanair DAC’s and Storm Global Limited’s appeals from the decision of the London (East) Employment Tribunal (the “ET”) relating to the status of the claimant, Mr Lutz.

The appeal was about when both Ryanair and Storm Global appealed the ET ruling on the case from last year. This development could further influence the industry standards as both the appeals by Ryanair and Storm Global were dismissed in their entirety.

• The Employment Tribunal (ET) has found that a pilot working for Ryanair through intermediary company, MCG Aviation Limited, was an agency worker within the meaning of regulation 3(1) of the Agency Workers Regulations 2010 (“AWR”) and therefore entitled to holiday pay and sick pay.
• In their judgement the Judge discussed the aspects of Mr Lutz’s engagement with MCG and Ryanair and found in Mr Lutz favour on all of the issues.

Court Documents Further read ,

Mr Lutz was one of a pool of “contracted” pilots who flew Ryanair’s aircraft. He was supplied to Ryanair by MCG Aviation Limited (now Storm Global Limited). Mr Lutz brought claims: (i) against MCG alone for unpaid accrued annual leave pursuant to regulation 3 of the Civil Aviation (Working Time) Regulations 2004 SI 2004/ 756 (“CAWR”) on the basis that he was a “crew member” “employed” by MCG as a member of flight crew within the meaning of regulation 3; and/or within the parent Council Directive 2000/79/EC of 27 November 2000 concerning the European Agreement on the Organisation of Working Time of Mobile Workers in Civil Aviation; and/or a “worker” pursuant to Articles 31 and 47 of the Charter of Fundamental Rights of the EU (the “EU Charter”); and (ii) against both MCG and Ryanair seeking the same employment conditions as would have applied if he had been directly recruited by Ryanair, pursuant to the Agency Worker Regulations 2010 SI 2010/93 (“AWR”) on the basis that he was an “agency worker” within the meaning of regulation 3(1).

Earlier, on the background of the case , Mr Lutz had applied to be a pilot for Ryanair and was successful. He was then engaged by MCG who agreed to supply Ryanair with pilots. MCG set up a personal service company in order for Mr Lutz to operate as self-employed.

The personal service company had at that time entered into a five-year fixed term contract with MCG under which Mr Lutz was to work exclusively for Ryanair and either Mr Lutz ‘or an agreed acceptable and qualified nominated substitute’ would perform the work. Mr Lutz received no holiday pay under this structure.

How was it Decided  ? Pilot is Agency Worker or Self Employed ?

The Tribunal held that Mr Lutz was a worker engaged by MCG and an agency worker placed by MCG with Ryanair. He was not self-employed, nor an employee of Ryanair as there was no contact of employment between them.

The tribunal held that in order to be an agency worker, the work provided by the worker must be temporary. The five-year fixed term contract between the service company and MCG was not indefinite and was therefore temporary.

Factors which led ET to decide Mr Lutz is an agency worker

• Mr Jason Lutz had a Ryanair uniform as a Pilot.
• Mr Jason Lutz had to pass Ryanair competency assessments as part of Regulatory and Company Requirements.
• Mr Jason Lutz was put on a rota by Ryanair based on Schedules.
• The Assigned Aircraft could not fly without Mr Jason Lutz being there and so this made him integral to the business.
• The assignment was temporary as it was a five-year fixed term assignment.
• There was no right of substitution and the documentation to purport otherwise was a sham.
• Mr Jason Lutz worked under the supervision and direction of Ryanair as a Company.
• Mr Jason Lutz had to obtain permission for his absences.

Furthermore, the Tribunal held that Mr Lutz had a contract with MCG to provide his services personally and not via the service company, as despite the intention set out in the contract. One important factor towards the personal service test was that Mr Lutz’ ability to swap shifts was not a genuine substitution but merely a rearrangement of the day and time when his personal service was required.

There was, in fact, no unconditional right of substitution. Only another Ryanair pilot could take the shift and permission from Ryanair was mandated. The tribunal ruled that any documents purported to show that Mr Lutz was self-employed, and Ryanair was a customer of his personal services, were a sham.

Mr Lutz was expected to wear the Ryanair uniform, could not negotiate his pay, and was unable, in practice, to determine his working hours. Ultimately, Mr Lutz had a contract with MCG to provide his services personally to Ryanair and was subject to Ryanair’s framework of control.

What Was Pilot's Claim On Holiday Pay and Working Conditions ?

Mr Lutz had claimed against both MCG and Ryanair for holiday pay and for fairness in basic working conditions, respectively. ‘Workers’ are entitled to basic employment rights such as holiday pay while ‘agency workers’ are entitled to the same basic working conditions as comparable employees performing the same role, after a twelve-week qualifying period.

The crucial element that the Tribunal needed to establish was, therefore, the status of Mr Lutz’ employment. It was held that as both a worker and an agency worker, Mr Lutz was entitled to certain rights such as fair working conditions, a limitation of maximum working hours, and annual leave.

How Will This Decision Affect Aviation Industry ?

As mentioned in the ruling by the Tribunal, this case has wide implications due to the many purportedly self-employed pilots in the aviation industry who are engaged under similar contracts. If these pilots are also considered workers, and/or agency workers, then they will be entitled to the right to be paid annual leave and other basic employment rights.

This relevance of this case transcends that of the aviation industry as the existence of a service company will not be sufficient to prevent an Employment Tribunal deciding that the individual in question is a worker and/or an agency worker, dependant on the circumstances.

The Tribunal will consider the reality of the individual’s situation, looking behind any contractual agreements. This could expose businesses to potentially costly employment claims. 

Summary of the case

• Mr Jason Lutz was supplied by MCG Aviation Limited (“MCG”) to work temporarily for and under the supervision and direction of Ryanair DAC (“Ryanair”).
• Mr Lutz was required to perform services personally by virtue of his contract with MCG.
• The opt out completed by Mr Lutz did not exclude him from the definition of “agency worker” under the AWR because the claimant did not carry on a profession or business in which either MCG or Ryanair was a client or customer.
• Mr Lutz was a pilot for Ryanair and the claim made by him has significant impact on others who are in precisely the same position.
• Mr Lutz was a contracted pilot which Ryanair arranged for the second Respondent to manage (MCG). MCG refer this pool of pilots to accountants who set up the pilots with service companies so that they can be deemed as self-employed.
• The pilots engaged in this way are treated exactly the same as the pilots employed by Ryanair and the only small difference is in the airside ID which can be used to distinguish between the two types of pilots.

British Airline Pilots’ Association (BALPA) said in a statement,

This is a major legal victory for BALPA on behalf of Mr Lutz and in turn our Ryanair contractor pilot members, and for workers’ rights generally.

We have established that the member in whose name we brough this test claim, Jason Lutz, was a ‘crew member’ and a ‘worker’ of Storm Global (and that the intermediary company he was required to set up was a ‘sham’), thereby entitling him to holiday pay and other rights; and that he was an ‘agency worker’ of both Storm Global and Ryanair, which entitles him to the same employment conditions as those pilots recruited directly to Ryanair after a certain period of service.

Interim General Secretary and Head of Legal Services at BALPA, Miranda Rackley said:

“Once again the courts have ruled in our favour and that’s not only good news for Jason Lutz, but also for all the other similarly purported “self-employed” pilots in the aviation sector.