Ryanair Pilot Entitled to Paid Annual Leave - After Tribunal Rule He Was Not Self-Employed
In a significant Employment Tribunal decision, a so-called self-employed pilot placed with Ryanair by MCG Aviation Ltd was held to be a worker of MCG, and an agency worker of Ryanair.
Pilot Asked to Set Up Service Company
Following a successful application to be a pilot for Ryanair, Mr Lutz was passed to MCG Aviation Ltd (MCG), who manages a pool of 'contract pilots' to work with pilots directly employed by Ryanair. MCG confirmed to Mr Lutz that he would need to provide his services via a service company so that he could operate as self-employed. MCG provided Mr Lutz with the service company structure. The service company then entered into a five-year fixed term contract with MCG under which Mr Lutz was to provide personal services as a pilot to Ryanair. Mr Lutz received no holiday pay whilst working as a Ryanair pilot under these arrangements.
Holiday Pay and Working Conditions Dispute
Mr Lutz bought claims against both MCG and Ryanair for holiday pay and for parity in basic working conditions as an agency worker. Workers are entitled to basic employment rights including holiday rights. Agency workers, after 12 weeks of employment, are entitled to equal pay (compared to a permanent colleague doing the same job), sick leave, parental time off and other protections in relation to working hours and rest breaks. The question for the Tribunal was whether Mr Lutz was indeed a worker, and/or an agency worker.
Agency Worker or Self-Employed?
The tribunal held, as a preliminary issue, that Mr Lutz was a worker engaged by MCG and an agency worker placed by MCG with Ryanair. He was not a self-employed pilot, nor was he an employee of Ryanair. The documents purporting to show that Mr Lutz was self-employed and that Ryanair was a customer of his personal service company were seen by the Tribunal as a sham.
The Tribunal noted that Mr Lutz:
- was not able, in practice, to determine his working hours which were set by Ryanair
- had a very limited right to send a substitute
- was expected to wear the Ryanair uniform
- could not negotiate his pay
- had to apply to take days off
- was disciplined if he did not attend a shift
Ultimately, Mr Lutz had a contract with MCG to provide his services personally to Ryanair.
The Tribunal further noted that Mr Lutz was a 'crew member' in relation to the relevant aviation regulations which meant he would have access to the relevant working time protections. The Tribunal explained that it would be "extraordinary" if the regulations did not apply to contracted pilots, as they did to their salaried counterparts. It was clear that both employed and 'contracted' pilots were treated identically by Ryanair.
Why Is This Decision Significant?
This is a first instance decision and therefore not binding on other Tribunals. However, the Tribunal has made it clear that this decision will impact the many other pilots also engaged under self-employed contracts through service companies. If these pilots are also to be considered workers and agency workers, they will be entitled to the right to paid annual leave and other basic employment rights noted above.
The case is also relevant to organisations operating outside the aviation sector that engage with self-employed contractors through service companies. The existence of the service company will not be enough to prevent a finding that the individual in question is a worker and/or an agency worker, depending on the circumstances. The Tribunal will look behind the contractual arrangements in place in order to examine the reality of the relationship in order to determine employment status. This could expose organisations to potentially costly holiday pay claims.