Landmark Agency Worker Case

Landmark Agency Worker Case

The Court of Appeal has given judgment in a landmark case involving a pilot who provided his services to Ryanair via an intermediary agency and through a personal service company (PSC). The case, and its judgment, has far-reaching consequences for those working in the aviation industry but also to agencies, intermediaries, potentially Professional Employer Organisations (PEOs), and other end users. We report on the case and consider its implications.

Intermediary + Personal Service Company

Ryanair employs pilots directly but also has a “pool” of pilots who are contracted via an intermediary. This case concerns a former “contracted” pilot, Jason Lutz. Mr Lutz applied for a pilot role directly with Ryanair but, despite his application being successful, he was offered a role, not as an employee directly with Ryanair, but as a contractor via an intermediary agency, MCG Aviation (now Storm Global). MCG Aviation required Mr Lutz to provide his services to Ryanair through a PSC (Dishford Port Limited), and he was directed to a firm of accountants to set this up.

Under a five-year, tripartite contract Mr Lutz was required to work for Ryanair based on a number of flying hours each year, he could not freely substitute his services, he was referred to as a “Company Representative” and he was not entitled to holiday pay. The contract also stated that Mr Lutz was not an employee of Ryanair. Mr Lutz repeatedly asked to be directly employed by Ryanair, but this was refused. He continued to work under this arrangement from July 2018 till January 2020, until an incident arose between Mr Lutz and Ryanair which caused MCG Aviation to terminate his contract.

A dispute arose between the parties as to Mr Lutz’s employment status. Mr Lutz brought two claims (supported by his union British Airline Pilots' Association): (1) against MCG Aviation for unpaid holiday pay under the Civil Aviation (Working Time) Regulations 2004 on the basis that he was a “worker” and (2) against MCG Aviation and Ryanair under the Agency Workers Regulations 2010 (AWR) on the basis that he was entitled to parity of terms when compared to Ryanair’s employed pilots, as if he had been directly employed by Ryanair. Both Ryanair and MCG Aviation argued that Mr Lutz was self-employed and that the AWR did not apply because the arrangement under which Mr Lutz would provide his services could not be described as “temporary”.

Labels -v- Reality

The Court of Appeal found that regardless of any label attributed to Mr Lutz in the written contract, it was the reality of how Mr Lutz worked that mattered to the issue of status. Despite Mr Lutz having worked through a PSC, the Court found that he was not in business on his “own account” and that the relationship between himself and MCG Aviation was more than just “payroll”. The Court also found that Mr Lutz performed a personal service to Ryanair, he worked under its direction and rules (manuals/safety/regulatory/flying hours). Mr Lutz was found to be fully integrated into Ryanair’s workforce: he wore a Ryanair uniform, had a Ryanair ID card, he had to pass Ryanair’s competency assessments, plus Ryanair set his flying rosters. The Court also found that whilst there was a substitution clause within the written contract, the terms of it were so restrictive as to render it a “sham”. Moreover, even though the contract referred to a five-year term, it was still found to be a “temporary arrangement” under the AWR. The Court concluded that Mr Lutz was an agency worker entitled to the same basic terms of employment as other Ryanair pilots and was a “worker” of MCG Aviation and was therefore entitled to holiday pay.

What next - agencies, intermediaries, PEOs and end users?

Whilst this case concerns contracted pilots, it has wider implications on the status and rights of agency workers as well as those who work under complex “triangular” contracts. Even where the worker provides a service via an intermediary and, perhaps an accompanying PSC, it will be the reality of the working relationship with the end user that matters. In situations where the worker provides their services under “layers” (i.e. intermediary and PSC’s), it is how the worker works, the degree of control and the limitations on substitution rights that the courts will take into account, among other matters, when considering status. What is also important is the duration of the relationship – end hirers cannot seek to obfuscate worker and agency rights by creating an open-ended or long fixed-term arrangement. This opens the gates for courts and tribunals to assess the reality of the situation to determine if a contract is “temporary” or not for AWR purposes, which could cause issues for PEOs.

Help for businesses

The Court noted that there are 27 related cases waiting to be heard which were paused pending the outcome of this case. There are likely to be many others. The potential cost to businesses arising from this case, and others, will be hugely significant.

Whether you are an end hirer, PEO or a recruitment intermediary, Doyle Clayton is here to assist. Status cases (and separately tax implications) are complicated and fact specific; however, the key is to understand how people are engaged balanced against how, in reality, they are working. Let us help. From in-depth workplace audits to structuring labour supply agreements, we work with recruitment businesses and clients to find the right solution to their recruitment issue.

Lutz v Ryanair and Anor [2025]