1. Although there are around 1 million agency workers in the UK, there is little case law on whether they qualify as “limb (b)” workers for the purpose of qualifying for rights under employment protection legislation. Many cases have addressed the question whether they are employees, giving rise to the orthodoxy that there is no contract with the agency and no sufficient control by the hirer, meaning they are employees of neither (see, for example, Montgomery v Johnson Underwood Ltd [2001] ICR 819 CA; Bunce v Postworth Ltd t/a Skyblue [2005] IRLR 557 CA; Cairns v Visteon UK Ltd [2007] IRLR 175 EAT). Following James v London Borough of Greenwich [2008] ICR 545 CA, it is usually impossible to imply a contract of employment between the individual worker and end user.
2. But what about worker status? We have addressed this in our note following the handing down on the judgment in Jason Lutz v (1) Ryanair DAC; (2) Storm Global Ltd CA-2023-002537; CA-2023-002546.
3. Following the Court of Appeal ruling (now reported at [2025] ICR 1448; [2025] IRLR 764), the Supreme Court has now refused both respondents permission to appeal, so that the judgment of the Court of Appeal is now sealed as the leading authority on the subject. The judgment also endorses the approach of previous EAT authorities that ‘temporarily’ in the definition of agency workers, central to the scope of protection of the Agency Workers Regulations 2010 (AWR), means “not permanent”.
4. The Facts. This was test litigation brought by BALPA (the pilots’ union) who supported one of its members, Jason Lutz. In response to an advert, Mr Lutz applied to Ryanair for employment as a pilot. He passed the preliminary assessment conducted by Ryanair following which he was contacted by an agency, SGL, who informed him that he was to be offered a place as a “contracted pilot”. At SGL’s instruction, he was “installed” into a personal service company set up for him called Dishford. Mr Lutz had little to do with Dishford and the arrangements were managed by a firm of accountants on a panel suggested by SGL. The ET found that the interposition of a service company was a “fiction”, presumably intended to camouflage the existence of an employment relationship between SGL and Mr Lutz. Underhill LJ referred to the “distinctly unsatisfactory nature” of these arrangements (at §16).
5. Mr Lutz was required to enter into a services agreement between three parties: himself as the “Company Representative” of Dishford, Dishford, and SGL. The agreement defined Ryanair as the hirer and described the services to be provided as carrying out the duties of a pilot. Mr Lutz was stated to be an “independent consultant”, and SGL was named as the “Contractor”. Exemplifying the sort of drafting by “armies of lawyers” to which Elias LJ referred in Kalwak [2007] IRLR 560, the agreement repeatedly denied worker status and included a substitution clause which the ET found was a sham. Mr Lutz was required to be personally available to perform flying duties for Ryanair for 11 months of the year. He did not receive any holiday pay. He worked under Rynair’s direction and control, just like a directly-employed pilot. His contract was for a fixed-term of five years, though it was the practice to renew the contracts of the “very few” agency pilots who stayed that long.
6. Worker status: The first issue before the CA was whether he was a crew member ‘employed under his contract’ by the agency, SGL, for the purpose of the right to paid annual leave in the Civil Aviation (Working Time) Regulations 2004 (CATWR). The CA held he was, drawing on authorities of the CJEU such as Allonby [2004] ICR 1328 and LM v Omnitel [2025] ICR 688, relevant to the background to CAWTR. In Omnitel, the CJEU held that when an agency worker is assigned the “agency retains an employment relationship with the worker but transfers the responsibility for supervision and direction which generally lies with all employers to the user undertaking”. According to Underhill LJ, Mr Lutz was “obviously” a worker, and when it came to whether SGL or Ryanair was the employer, the Court looked to see who was at the other end of the contract he signed.
7. While the judgment was on the meaning of CAWTR, it has obvious implications for whether “ordinary” agency workers are workers employed by their agency for the purpose of, e.g., s.230 of the Employment Rights Act 1996. Just as Mr Lutz was employed “under” a contract with SGL, so an agency worker will ordinarily work “under” a contract with the agency. To the extent direction and control is necessary in such an arrangement, it “may be exercised by the principal rather than the employer” (Underhill LJ at §61). It is unlikely that the requirement to work “for” the other party – something considered in Uber v Aslam [2021] 657 – will affect this result.
8. The judgment also throws open the intriguing question of whether the case-law on the employee status of agency workers needs revisiting. The orthodoxy is that the individual is not an employee of the agency because it doesn’t exercise day-to-day control over him or her. The recent decision of the Supreme Court in Professional Match Game Officials [2024] ICR 1481 emphasises just how light is the touch applied to finding a sufficient framework of control and how it is not confined to the right to give direct instructions. Are the contractual rights of the agency sufficient to show the reservation of a power of control? Does Omnitel point towards the correct analysis, that control is temporarily transferred to the hirer but not renounced by the agency? Have cases subsequent to Montgomery imposed too high a threshold for sufficient control? As the CA pointed out, it is not at all uncommon for workers employed by one person to work for another (§65): if that does not affect their employment status, why should agency workers be in any different position? Watch this space.
9. Agency Worker: “Temporarily”: In addition to the claim under CATWR, Mr Lutz also contended that he was an “agency worker” in accordance with the bespoke definition in reg. 3(1) AWR and so entitled to the same core terms and conditions as directly employed pilots. Ryanair and MCG contended he was not because, properly interpreted, “temporarily” meant short-term.
10. The second important aspect of the CA’s judgment, now set in stone by the refusal of permission, is that the term “temporarily” means ”not permanent”. It does not mean short-term.
11. This was presciently decided by Singh J (as then was) in Moran v Ideal Cleaning Services [2014] ICR 442 and was endorsed in the later EAT authorities listed by the CA at §82. Although some decisions of the CJEU on the Agency Worker Directive, such as Case C-232/20, NP v Daimler NP, might be read as indicating that after a sufficiently long period of working for a hirer an agency worker can no longer be regarded as “temporary”, those cases in fact concerned the abuse of successive assignments to the detriment of the worker, by denying the worker permanent employment. They could not be relied upon to take a worker outside the scope of protection of AWR, which was the implication of Ryanair’s argument (see CA at §103). In consequence of the Supreme Court’s refusal to grant Ryanair and SGL permission to appeal, the upshot is that an agency worker who is not engaged permanently or on an open-ended basis is engaged “temporarily” and so is protected by AWR against unequal treatment. In Mr Lutz’ case, therefore the AWR applied to a his fixed-term contact of 5 years. This broad scope of protection accords with the purpose of the Directive and AWR.
12. Employment Rights Bill. Finally, keen observers will note that the definition of ‘agency worker’ in clause 27BV of the Employment Rights Bill does not include any requirement that the supply is temporary. It is even wider in scope that AWR.
Michael Ford KC and Stuart Brittenden KC, instructed by Alice Yandle (Partner) and Caitlin Farrar of Farrer & Co acted for Mr Lutz, who was supported by his union BALPA.
