When it comes to a ‘self-employed’ pilot’s worker status, don’t wing it!

In July 2025, the Court of Appeal handed down its unanimous decision (per Underhill LJ, Elisabeth Laing LJ and Males LJ agreeing) in Jason Lutz v (1) Ryanair DAC (2) Storm Global Ltd [2025] 7 WLUK 133. This is an important judgment for the aviation industry generally and for Ryanair specifically – Underhill LJ noted in his judgment that 27 further claims brought by contract pilots (a term defined below) against Ryanair had been stayed pending the outcome on appeal. However, the decision will also affect a variety of other industries which depend regularly upon contracted ‘supply’ or ‘agency’ workers.  

Facts

At the time of relevant events, Ryanair’s pilot workforce comprised two groups: pilots Ryanair directly employed, and contract pilots (i.e., supply /agency pilots) supplied to Ryanair by MCG Aviation Ltd (“MCG”) (now called Storm Global Ltd) (“the MCG Agreement”). The MCG Agreement contained several clauses which recorded expressly that it was not the intention of Ryanair or MCG for any supplied workers to be Ryanair employees or agents, or to be integrated into Ryanair’s workforce. Further, the MCG Agreement was designed to give Ryanair flexibility by having a pool of contract pilots upon whom it could rely during busier periods without it having to give them work (and so pay them) during less busy periods.

Mr Lutz was from July 2018 to January 2020 a Ryanair contract pilot based at Stansted and flying Boeing 737s.  As between himself and MCG, Mr Lutz’s services were nominally supplied by an Irish limited company supposedly owned and controlled by him – a personal services company (“PSC”). MCG had required Mr Lutz to establish the PSC, and they had recommended accountants to control it for him; in practice, Mr Lutz had little to do with the management or operation of the PSC. Mr Lutz was required to enter into a contract as the “company representative” of the PSC with MCG pursuant to which he was hired out to work as a contract pilot for Ryanair for a five-year term (“the PSC Agreement”). The PSC Agreement stated that Mr Lutz was not an employee of either Ryanair or MCG and recorded that Mr Lutz could send a substitute to work in his stead. 

During the time Mr Lutz worked for Ryanair under the PSC Agreement, and in furtherance of the MCG Agreement, he received no holiday pay. MCG terminated Mr Lutz’s contract in January 2020. Mr Lutz issued a claim in the employment tribunal (“ET”) against Ryanair and MCG, advancing two distinct causes of action:

• A claim against MCG alone for unpaid holiday pay accrued at the date of his termination, brought under the Civil Aviation (Working Time) Regulations 2004 (“CAWTR”).
• A claim against both Ryanair and MCG for breach of Regulation 5 of the Agency Workers Regulations 2010 (“AWR”) for compensation for not being afforded equality of terms, particularly (holiday) pay, compared with an appropriate comparator (being a Ryanair employed pilot).

For those less familiar with the CAWTR and AWR, the key points for this article are these:

• The CAWTR is broadly analogous to the Working Time Directive but applies to those working in civil aviation. Under the CAWTR crew members are entitled to annual leave. A ‘crew member’ under the CAWTR means a person ‘employed’ to act as a member of the cabin crew or flight crew on board a civil aircraft by an undertaking established in the UK.
• Under the AWR, agency workers are entitled to receive the same basic working and employment conditions (including pay) as employed staff after 12 weeks of working for a hirer. An ‘agency worker’ under the AWR is an individual supplied by a temporary work agency to work ‘temporarily’ for and under the supervision and direction of a hirer.

It was therefore central to Mr Lutz’s claim that he prove two things: (1) he was ‘employed’ to work (and, in this respect, he contended that MCG was his employer) as flight crew; and (2) he was supplied to Ryanair ‘temporarily’ (notwithstanding that the PSC Agreement was for a five-year term).

Decisions below

The ET found, following a preliminary hearing, that Mr Lutz had the required status to bring the two claims he alleged. It agreed with him that the provisions of the PSC Agreement which purported to exclude employee/worker status were a sham, and so too was the PSC itself insofar as it purported to interrupt an employment relationship between MCG and Mr Lutz, and Mr Lutz was ‘employed’ by MCG for the purposes of the CAWTR and therefore entitled to holiday pay. The ET also held that Mr Lutz qualified as an ‘agency worker’ under the AWR since he had been engaged to supply work ‘temporarily’ to Ryanair and he could therefore bring a separate claim for compensation for breach of Regulation 5 of the AWR.  The Employment Appeal Tribunal (“EAT”) upheld the ET’s findings on appeal.

Decision of the Court of Appeal

The Court of Appeal dismissed Ryanair’s appeal. In summary, its conclusions were these:

• Regarding the construction of ‘temporarily’ under the AWR, the Court of Appeal clarified that the cardinal distinction in this field is between employment which is permanent, in the sense of indefinite, and employment which is finite (typically because fixed-term), and that the word was used to connote cases of the latter kind. This construction was derived primarily from the fact that the EU legislators, and subsequent CJEU authority, explicitly state that permanent employment is the norm, and that the AWR was to regulate employment relationships outside of the norm. Any contrary construction would create a gap in the protection afforded to agency workers who were employed neither permanently nor on a short-term basis, which would defeat the clear purpose of the law. In this case, the PSC Agreement provided for a five-year fixed term. It would almost always be the correct analytical starting point to consider the basis upon which worker’s services are supplied by the agency to the hirer, and this may be expressed in the contract and/or may be ascertainable from the facts (for example, if the contract is silent on this point).
• Mr Lutz’s employment relationship was with MCG, not Ryanair. The unsurprising fact that Mr Lutz provided his services under the direct supervision and control of Ryanair made no difference: that was typical in the tripartite contractual arrangement between a hirer and temporary work agency.
• The Court of Appeal weighed up whether treating MCG as Mr Lutz’s employer would create insurmountable difficulties in the Aviation industry specifically because Ryanair, as the controlling airline managing flight crew working time, rotas, schedules and so on, was the entity with the power to comply with the obligations imposed under the CAWTR. The Court concluded, however, that the effect of the CAWTR was to require the employer (i.e., MCG) to secure that the operator comply with the CAWTR and this could be reduced into writing and was likely already happening in practice.

Implications

A sigh of relief, perhaps, for those airlines whose workforce is in-part comprised of agency workers! This decision confirms that even though an airline will have day-to-day control over agency workers (such as pilots), that does not necessarily mean that the airline will be treated as the employing entity, especially where there is a contract between the agency worker and the supplier containing express provisions to the contrary.  

For those who are involved in contractual arrangements concerning the provision of agency workers, it would be wise to conduct a thorough audit of extant agreements with the following points in mind:

• ‘Temporarily’ does not mean short-term; a contract of multiple years may still qualify as temporary under the AWR and therefore trigger the various rights and obligations under that regulatory framework.
• Although in Mr Lutz’s case his contract with MCG was clearly expressed to be for a single, fixed-term and therefore his work was deemed to be supplied ‘temporarily’, the position is likely to be more complicated where the contract between agent and worker contemplates multiple supplies. The position may be complicated further if the complainant’s case is that they understood the practice of issuing fixed-term contracts would continue indefinitely. Careful consideration should therefore be given to the way in which the contractual arrangement and associated communications with workers show an intention of supplying temporary (i.e., non-indefinite) work.   
• The hirer and supplier in a temporary worker supply arrangement will need to consider (and possibly negotiate) who will be responsible for bearing the cost associated with ensuring compliance with the AWR, including equalised pay between the temporary worker and a valid comparator worker at the hiring entity. (Under Regulations 5 and 14 of the AWR, liability for any breach of the right to equalised pay may rest with either the hirer or the temporary worker agency (or both), depending upon the extent of their respective responsibility for the breach.)