Employment and worker status: the risks and costs of getting it wrong

Determining the correct employment status of an individual is sometimes a tricky task for employers to get right – are they an ‘employee’, a ‘worker’ or genuinely ‘self-employed’? Part of the problem is the complexity of the law in this area, which is often more about shades of grey rather than black and white. Two recent cases illustrate the dangers associated with getting the employment status of a worker or employee wrong.

Pilot contracted via chain of intermediaries was not ‘self-employed’

In Lutz -v- Ryanair DAC & Anor, a pilot who flew for Ryanair contracted via a chain of intermediaries was held to be a worker of the main intermediary (MCG) and an agency worker when flying for Ryanair. Essentially, Ryanair flights are piloted by a combination of its own directly employed pilots and a pool of contracted pilots who are supplied to it by an intermediary, MCG. Following his application and selection, Mr Lutz contracted with MCG via a service company set up by an accountancy firm arranged by MCG. Whilst flying for Ryanair, Mr Lutz was fully integrated with its other pilots – wearing the airline’s uniform and ID card, taking its competency assessments, and flying from a base it fixed according to its flight rosters. After a few years, following a dispute about rostering, MCG Ltd terminated the arrangement with Mr Lutz following a disciplinary process attended by a Ryanair representative. Before the...

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