Navigating the Turbulent Skies of Self-Employed vs Worker Status

This is a guest blog by Trishna Modessa-Parekh, Associate at Brabners

The debate around worker status continues with the recent case of (1) Ryanair DAC and (2) Storm Global Ltd v Jason Lutz, in which the Employment Appeal Tribunal (“EAT”) held that Mr Lutz was a worker despite having been supplied to the airline via a personal service company.

Summary of Facts

Mr Lutz was a pilot contracted to Ryanair under a five-year contract. He was supplied to Ryanair via MCG Aviation Limited (now Storm Global Limited). The Employment Tribunal concluded that Mr Lutz was not in business on his own account and neither Ryanair nor MCG were his clients (which Ryanair nor MCG did not dispute).

Mr Lutz brought a claim against both Ryanair and MCG for parity with direct recruits pursuant to the Agency Workers Regulations 2010 (“AWR”) and importantly, for holiday pay pursuant to the version of the Working Time Regulations which applies specifically to pilots (the “CVWTR”). Both Ryanair and MCG argued that Mr Lutz was self-employed and as such, he was not entitled to these rights as a worker.

Factors pointing to worker status

The Tribunal looked beyond the contractual terms agreed between the parties to ascertain the reality of the relationship, which led to the finding that Mr Lutz was, in fact, a worker who was supplied by MCG to work temporarily for Ryanair.

The following facts were taken into account when assessing Mr Lutz’s status:

• He was required to apply to become a pilot for Ryanair and followed Ryanair’s selection process.
• He was required to wear the Ryanair uniform.
• He was placed on a rota that was prepared by Ryanair.
• The assignment was considered “temporary” albeit for five years.
• Mr Lutz had an extremely limited/ narrow right of substitution, which was considered a sham.
• Mr Lutz was required to provide a personal service to Ryanair and had hardly any discretion over how he did his work.

The Tribunal also took into consideration the fact that the CVWTR are health and safety regulations, and it wouldn’t be right if salaried pilots employed directly by Ryanair were subject to CVWTR but a contracted counterpart is not, despite being required to fly a passenger plane.

The EAT  

The EAT upheld the Tribunal’s decision that Mr Lutz was indeed an agency worker (and therefore entitled to AWR rights), but that he was also “employed” as a “crew member” by MCG for the purposes of the CVWTR, and that he should, therefore, be entitled to annual leave and pay.

How does this effect employment businesses?

This decision serves as a useful reminder to employment businesses that the fact that a contractor is engaged through an intermediary is not definitive evidence that they are self-employed.  Whilst it may, initially, suit all parties in the chain for the individual to be classified as self-employed, there is a risk that the true nature of the relationship may be scrutinised or challenged in due course, with the potential outcome that the individual should have been afforded worker/employee rights (and taxed as such).