For several years now, Employment Tribunals and the Courts have addressed the complex issue of employment status in numerous cases, including Uber Drivers, Pimlico Plumbers and Deliveroo. These cases all have the potential to be legally complex and extremely fact sensitive; essentially, they all address the question of employment status within the context of individuals being either employees, workers, or truly self-employed.
These cases often arise due to the rapidly changing nature of employment relationships since the emergence of the “gig economy”. The law on employment status has been found wanting and has been under the eye of the Government for some time.
The “Taylor Review of Modern Working Practices” was published in July 2017 which was followed by the Government’s “Good Work Plan” that highlighted areas of employment law ripe for reform; employment status was one of these areas. Although the Government has started to move on some of these proposed changes, progress has been derailed by the Coronavirus pandemic.
It remains to be seen what the Government plans to do about reforming the law on employment status and proposed new legislation is awaited.
The recent Employment Tribunal case of Lutz v Ryanair DAC and MCG Aviation Limited is yet another reminder of the confusion and uncertainty surrounding this area. Although a first instance case and therefore not binding, the Tribunal nevertheless noted that the case had potentially wide implications for the aviation industry, which often purports to hire some pilots on a self-employed basis.
Mr Lutz successfully applied to Ryanair to be a “contracted pilot” with the expectation that he would be self-employed. However, Ryanair then directed him to MCG, a specialist recruitment agency supplying pilots to the Company. MCG set up a Personal Service Company (PSC) under which Mr Lutz could operate and (purportedly) provide his services to Ryanair via that company on a truly self-employed basis. Although on paper Ryanair would become a “customer” of Mr Lutz’s PSC, the airline had had no involvement in liaising with or negotiating with that company regarding the terms under which it would retain Mr Lutz’s services.
MCG entered a 5-year fixed-term contract with the PSC; all work under that arrangement was exclusively for Ryanair. Mr Lutz, or an agreed, acceptably qualified substitute, would perform the work.
Mr Lutz brought employment tribunal proceedings against Ryanair and MCG, presumably to clarify his status and pursue sums owed to him. The Tribunal concluded that he was, in fact, retained by MCG as a “worker” and was also an agency worker under The Agency Workers Regulations. He was not a self-employed contractor.
Despite written contracts which purported to show Mr Lutz was entirely self-employed, the Tribunal concluded, on the facts of this case, that these were a sham; Mr Lutz provided his services personally via MCG and was, therefore, to be properly viewed as an agency worker. He provided these services personally, with little or no control over rostering and other aspects of his work with Ryanair; therefore, he was also a “worker” as defined under the Employment Rights Act 1996. Worker status affording Mr Lutz limited (but not full) employment law rights, including entitlement to paid leave.
This case is a further reminder that urgent legislation is required to re-define and effectively codify employment status; that regardless of the contracts and documents signed by the parties, a Tribunal will decide an individual’s employment status by reference to the specific facts and circumstances of the case.
If you require advice about employment law contracts, please contact Holmes & Hills Employment Law specialists.
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