Lutz v Ryanair: What does the latest case on agency workers mean for EPL insurers?

The recent case of Lutz v Ryanair provided useful guidance on the categorisation of workers. In this article, we consider the potential implication for employment practices insurers.

Case background

Mr Lutz, a pilot, applied to Ryanair to become a directly employed pilot. Rather than offering him a job as an employee, Ryanair instead offered Mr Lutz a role as a consultant through an agency. He provided his services via the agency through a personal service company (PSC).

Under the terms of the contractual arrangement between Mr Lutz’s PSC, the intermediary company (MCG Aviation) and Ryanair, Mr Lutz was required to undertake a certain number of flying hours for the airline. Crucially, he was not entitled to provide a substitute for his services and he was not entitled to receive holiday pay. The contract also expressly stated that Mr Lutz was not a direct employee of Ryanair (although Mr Lutz repeatedly asked to be a direct employee).

This arrangement remained in place for two years before MCG terminated the contract. Mr Lutz brought a claim, asserting that he was entitled to holiday pay as he should be treated as a “worker” and, therefore, be treated on the same terms as Ryanair’s employees.

MCG and Ryanair both argued that Mr Lutz was self-employed and not a worker.

The decision of the court

In keeping with the court’s general approach to worker status, i.e. it is the nature of the relationship that matters rather than the labels used in the contracts, the court held that Mr Lutz was an agency worker and was therefore entitled to holiday pay.

In reaching that finding, the court concluded that Mr Lutz was working at all times under the control, direction and supervision of Ryanair; he was required to operate in accordance with their instructions, wear their uniforms, and could not substitute himself for another worker. The fact the contract may have used other terminology is irrelevant.

Impact for insurers

EPL insurers will want to pay close attention to this latest in a long line of decisions on worker status.

There is clear line of authorities that the courts and tribunals will generally apply 'the duck test', i.e. if the relationship between parties looks like an employment or worker relationship and the parties act in that manner, the court or tribunal will treat them as such (and grant rights accordingly).