Court of Appeal Clarifies Employment Rights of Agency Workers in Ryanair Case

A recent decision by the Court of Appeal in Lutz v Ryanair DAC & Storm Global Ltd has implications for employers and agencies. The judgment reaffirms key principles regarding the employment status of agency workers and their right to equal treatment.

Case summary: Pilot claims for unpaid annual leave and equal terms

Mr Lutz worked as a pilot for Ryanair from July 2018 to January 2020. Though formally contracted through a personal service company, the arrangement was facilitated by MCG Aviation Ltd (MCG), now Storm Global Limited, an intermediary that supplied contracted pilots to Ryanair.

Mr Lutz brought two primary claims:

1. Unpaid annual leave – a claim against the agency for payment under the Civil Aviation (Working Time) Regulations 2004 (CAWR).
2. Equal terms – a claim against both Ryanair and Storm Global under the Agency Workers Regulations 2010 (AWR), arguing he was entitled to equal pay and conditions to directly employed pilots.

The Employment Tribunal and Employment Appeal Tribunal found in Mr Lutz’s favour.

The case was then taken to the Court of Appeal.

Court of Appeal finds in favour of pilot

1. Employment status and annual leave

The Court of Appeal confirmed that Mr Lutz was a “crew member employed by [Storm Global]” under the CAWR and had the employment status of a “worker”, entitling him to paid annual leave.

Key points:

• Mr Lutz was not self-employed as he was not in business on his own account. An employment relationship existed somewhere.
• That relationship could be found within Mr Lutz’s contract with MCG, which created an employment relationship with MCG for CAWR purposes.
• There was no need to imply a contract with Ryanair – an express one already existed with MCG. The fact that Ryanair controlled Mr Lutz’s work by assigning rosters and flight bases, conducting assessments and performance reviews, and integrating contracted pilots directly with employed pilots didn’t change this.
• The existence of a tripartite arrangement (worker – agency – end-user) does not negate an employment relationship between the worker and agency.

Agencies remain responsible under working time legislation—even when operational control lies with the end-user.

2. Equal treatment under the Agency Workers Regulations

The central issue was whether Mr Lutz was working “temporarily” for Ryanair, as required by the AWR definition of an “agency worker.”

The Court of Appeal concluded that:

• A five-year supply agreement constitutes a “temporary” supply, despite being long-term.
• “Temporary” under the AWR means “not indefinite,” not necessarily “short-term.”
• An agency worker can be supplied on multiple fixed-term arrangements and still fall within the scope of the AWR.
• The nature of the supply is judged at the point of contract, not retrospectively based on length of service.

A long-term agency arrangement does not remove the obligation to offer equal treatment. Employers cannot avoid AWR obligations by extending fixed-term arrangements indefinitely.

Key takeaways from the case’s outcome

The outcome of this case confirms that:

• Legal responsibilities can remain with agencies, even when the end-user has operational control.
• Long-term agency arrangements must comply with the AWR in relation to equal treatment.
• Employment tribunals will assess substance over form when it comes to employment status. This is to say, employment tribunals will prioritise the true nature of a working relationship, even if it differs from what is stated in a contract or written agreement.

Tips for employers and temporary supply agencies

1. Review agency and contractor arrangements:
   Ensure clarity in contracts and that intermediary relationships reflect true legal responsibilities.
2. Ensure equal treatment of agency workers:
   If engaging agency workers—regardless of duration—employers must align pay and conditions with those of directly employed staff after the 12-week qualifying period.
3. Avoid mischaracterisation of roles:
   Attempting to classify long-term arrangements as independent contractor work or as outside the scope of employment law may fail under judicial scrutiny.
4. Beware of the risk of claims from agency workers:
   This decision clears the way for claims from agency workers in similar positions (the Court of Appeal noted there were 27 claims by Ryanair pilots which were paused pending the outcome of this case).

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