Ryanair DAC & Anor v Jason Lutz

The Employment Appeal Tribunal dismissed the appeals by Ryanair DAC and Storm Global Limited against the Employment Tribunal's preliminary findings on the status of the claimant, Mr Lutz. The EAT upheld the ET's conclusions that (i) Mr Lutz was a "crew member" employed by MCG within regulation 3 of the Civil Aviation (Working Time) Regulations 2004 (CAWR), (ii) he was a worker for the purposes of Article 31 of the EU Charter, and (iii) he was an "agency worker" within regulation 3(1) of the Agency Worker Regulations 2010 (AWR).

Key legal principles applied were:

• For CAWR, "employed" is to be understood by reference to the EU law concept of an employment relationship as explained in Allonby and subsequent authorities; the EAT held that Uber did not narrow the CJEU approach and that the ET's factual findings supported an employment relationship between MCG and Mr Lutz.
• For the AWR, regulation 3(1)(b)(ii) requires that the contract with the agency is to "perform work or services personally"; the ET was entitled to conclude that any right of substitution was a sham or so fettered as to be inconsistent with unfettered substitution and therefore personal performance was required.
• On temporariness under regulation 3(1)(a) AWR, the EAT applied EAT authority (Moran, Brooknight, Angard) that "temporarily" contrasts with an indefinite or open-ended supply and does not require short duration; a fixed five-year term was properly characterised as temporary for AWR purposes.

The ET's unchallenged factual findings that the claimant was not in business on his own account, that Dishford (the service company) was a fiction, that there was a complete imbalance of bargaining power, and that pilot rostering and control lay with Ryanair, materially supported the ET's legal conclusions.

Background and parties: The claimant, Mr Lutz, was one of a pool of "contracted pilots" who flew Ryanair aircraft. He was engaged through MCG Aviation Limited (now Storm Global Limited). He alleged (i) unpaid accrued annual leave under regulation 3 CAWR (as a "crew member" employed by MCG and/or under the Aviation Agreement and Articles 31 and 47 EU Charter) and (ii) entitlement under the AWR to the same basic working and employment conditions as if directly recruited by Ryanair as an "agency worker".

Procedural posture: The ET (London (East), Employment Judge Housego) held after a preliminary hearing that Mr Lutz satisfied the relevant statuses. Ryanair and MCG appealed to the Employment Appeal Tribunal. The appeals were heard on 23-24 October 2023 and determined by the EAT on 30 November 2023.

Relief sought: Appellants sought to overturn the ET's conclusions as to: (a) whether Mr Lutz was "employed" by MCG for CAWR purposes; (b) whether he was an "agency worker" under regulation 3(1) AWR (including challenges as to temporariness and personal performance/substitution); and (c) whether MCG fell within the regulation 4(2) exception for temporary work agencies.

Issues framed by the court:

• Whether, for CAWR purposes, Mr Lutz was "employed" by MCG (the meaning of "employed" being the EU law employment relationship).
• Whether Mr Lutz was an "agency worker" under reg 3(1) AWR: supplied temporarily to work under the hirer’s supervision and direction, and having a contract with the agency to perform work or services personally (including whether any right of substitution negated personal performance).
• Whether the supply was "temporary" for AWR purposes (distinguishing temporary/fixed-term supplies from indefinite supplies).
• Whether the regulation 4(2) AWR exception applied to MCG.

Court’s reasoning (concise): The EAT reviewed the ET's factual findings (uncontested matters included the contractual arrangements, the service-company fiction, the imbalance of power, Ryanair-controlled rostering and training, and the five-year term). Applying EU and domestic authorities, the EAT concluded:

• On CAWR: The EU law test (as in Allonby) permits a finding that a person is employed by an agency even though the services are performed under the end user’s direction; Uber did not displace that approach. The ET's findings, including that the claimant was not in business on his own account and that any independence was merely notional, supported that he was employed by MCG for CAWR purposes.
• On AWR personal performance and substitution: The ET was entitled to find that the written substitution clause was a sham and that any substitution right was fettered by regulatory and operational constraints such that it did not amount to an unfettered right to substitute; accordingly the contract was to perform services personally.
• On temporariness: The EAT followed EAT authority (Moran, Brooknight, Angard) that "temporarily" contrasts with an indefinite/open-ended arrangement and that a fixed-term arrangement (even of substantial duration) can be temporary. The ET was entitled to find that the supply of the claimant for a fixed five-year term was temporary.
• The ET did not err in refusing MCG's regulation 4(2) exception: it was not pleaded and the factual findings placed MCG within reg 4(1)(a) (supplying individuals to work temporarily), so the narrow payroll exception in reg 4(2) did not apply.

Disposition: The EAT dismissed the appeals and granted MCG permission to amend its grounds to add one additional ground; the ET's preliminary status findings therefore stand.

Appeal dismissed. The EAT concluded that the Employment Tribunal had not erred in holding that (i) Mr Lutz was a crew member "employed" by MCG for the purposes of regulation 3 CAWR (the EU concept of an employment relationship applied and Allonby remained applicable), (ii) he was an "agency worker" under regulation 3(1) AWR because his contract was to perform services personally and any right of substitution was sham or so fettered as to be ineffective, and (iii) the supply to Ryanair for a fixed five-year term was properly characterised as "temporary" within the meaning of regulation 3(1)(a) AWR. The appeals against those conclusions were therefore dismissed.

Appeal from the London (East) Employment Tribunal (Employment Judge Housego) reserved judgment dated 5 April 2022 on a preliminary hearing determining status issues. The Employment Appeal Tribunal delivered judgment dismissing the appeals on 30 November 2023 [2023] EAT 146.