Court of Appeal Decision between Jason Lutz and co-defendants Ryanair DAC (‘Ryanair’) and Storm Global Limited (‘SGL’) (CA-2023-002537 and CA2023-002546) on 8 July 2025.
Background
British Airline Pilots’ Association (‘BALPA’) brought a test case on behalf of pilot Jason Lutz (‘JL’), who applied to Ryanair and, after passing assessment, was hired via agency SGL. SGL required JL to work through a personal service company (‘PSC’), Dishford Port Limited, set up on his behalf.
At the relevant time, Ryanair pilots fell into two categories: (a) directly employed pilots and (b) contracted pilots supplied through an arrangement with MCG Aviation Ltd (now SGL).
JL signed a three-party contract labelling him an “independent consultant” with a five-year term, no holiday pay, and a sham substitution clause, despite being required to work for Ryanair 11 months a year. The Court of Appeal described the arrangement as “distinctly unsatisfactory.”
JL was from July 2018 to January 2020 a Ryanair contracted pilot based at Stansted and flying Boeing 737s.
On 13 January 2020, after an incident involving JL and Ryanair management, MCG sent a letter terminating Jl’s contract with Dishford.
Summary of ruling
The Court of Appeal held that an employment relationship can exist between a worker and an intermediary agency in a tri-partite setup, even where the hirer controls day-to-day work. It confirmed JL was an agency worker under regulation 3(1) of the Agency Workers Regulations (‘AWR’), entitled to same basic terms as Ryanair pilots. The Court emphasized that contractual labels did not override reality:
- The substitution clause was a sham.
- The five-year term was still “temporary” under AWR, as it was terminable and not truly indefinite.
Implications & Ratification
- The Court emphatically endorsed the Employment Tribunal and Employment Appeal Tribunal’s (‘EAT’) reasoning that, regardless of contractual labels, the functional relationship—personal provision of services under Ryanair’s direction—was decisive.
- It further affirmed that restrictive conditions (like safety/regulatory limits around substitution) must be evaluated in context, not dismissed as mere legalities.
- In outcome, JL’s secured status as an agency worker remains intact, entitling him to equal basic working conditions, including pay and holiday protections.
What This Means
- Ryanair and SGL remain liable to provide basic working terms to supplied pilots under AWR.
- The judgment strengthens the precedent that tripartite, fixed-term supply arrangements—even in tightly controlled sectors like aviation—cannot obscure statutory worker rights if the practical reality contradicts the contractual form.
Implications for Workers, Employers & Agencies
For Workers:
- More protection: Individuals working via intermediaries or service companies can still claim agency worker rights if they:
- Work under supervision and control,
- Cannot meaningfully substitute,
- Are supplied on a non-permanent basis.
For Hirers like Ryanair:
- Cannot rely on long-term fixed contracts or supply chain layering to exclude people from basic entitlements.
- Must treat “agency” workers equally if they are functionally integrated into operations.
For Future Cases:
- Clarifies the meaning of “temporary” in AWR 2010: not based solely on duration, but on the lack of permanence or open-ended employment.
- Reinforces a substance-over-form approach: courts will ignore cosmetic arrangements that obscure employment realities.
Implications for tax purposes
The ruling in Lutz did not directly determine JL’s employment status for tax purposes, as that was not the focus of the litigation. Instead, the case dealt with worker status under employment law (e.g., entitlement to rights under the Employment Rights Act and the Agency Workers Regulations 2010). Worker status is not recognised for tax purposes.
However, the findings could have implications for tax, because:
- If an individual is found to be a worker or employee under employment law, that can indicate a higher likelihood of being considered an employee for tax purposes.
- The use of a personal service company (PSC) and the finding that it was a “fiction” may also support an argument that IR35 (off-payroll working rules) could apply, meaning tax should have been paid as if JL were an employee.
In summary
The ruling focused on employment protections, not taxation—but it may influence tax assessments.
Please contact the Employment taxes team should you have any questions.
