The Dekagram: 21st July 2025

This week Ben Rodgers considers how airline pilots are employed (or not); whilst Sarah Prager discusses a recent decision on discontinuance and costs.

Casenote : Lutz v. Ryanair [2025] EWCA Civ 849

Aviation and shipping employers often use third party recruitment agencies to recruit crew.  There is a tripartite relationship of worker, intermediary agency and hirer.  Shipowners have crewed their ships in this way for a long time and practitioners in that industry are used to its peculiarities (for example, the practice of onshore crewing agencies indemnifying the hirer against injury claims made by the worker). 

In the aviation context, a practice has arisen of airlines classifying pilots engaged through agencies as self-employed.  The gig economy in the cockpit.  BALPA has for several years been backing litigation seeking to apply employment law to this context.  That litigation culminated in the judgment of the Court of Appeal last week in the case of Lutz v. Ryanair [2025] EWCA Civ 849 – and a big win for the pilots’ association.

The facts

In 2008 the Agency Workers Directive created an obligation on EU member states to prevent discrimination against temporary agency workers.

The UK implemented the directive by the Agency Workers Regulations 2010.  These entitle agency workers to the same working and employment conditions as directly-hired workers.  The aggrieved agency worker can sue the agency or the hirer or both.

In 2011, Ryanair agreed with a company in Watford called McGinley that this latter would supply to Ryanair certain services.  The “services” would be provided by a number of “service companies.”  McGinley would arrange for the “service companies” to supply the services to Ryanair.  The “service companies” would each have a “company representative”, who would be a pilot.

Now, you could say, “McGinley agreed to supply pilots to Ryanair”.  But if you put it so bluntly, you would run the risk that Ryanair might owe the pilots obligations under the agency worker legislation; or worse, that Ryanair might end up employing them.  Under the agreement, Ryanair would absolutely not employ any of these pilots.  Neither would McGinley.  Nor would McGinley be acting as an employment agency.  The pilots (McGinley had 1,906 pilots on their books as at late 2017 and 85% of their turnover was for Ryanair) were all self-employed business people.  Buccaneering entrepreneurs of the skies.  The agency workers legislation, paid holiday etc, did not come into it – or at least it seemed so until BALPA’s challenge.

Jason Lutz is German.  He has a French driving license.  His father having been a pilot, he wanted to become a pilot too.  He obtained a commercial pilot’s license at his own expense and looked for work.  In August 2017 he responded to Ryanair’s advertisement for pilots.  The next month, he went to an assessment centre in Dublin, which cost him €350.  Five days later he received an email from McGinley, saying he had passed the assessment and “been offered a position as a cadet on the CAE cadet programme to qualify as a contractor pilot operating for our Client, Ryanair.”  McGinley told him he had to pay €29,500+VAT for a training course to learn how to fly a Boeing 737-800 of the type flown by Ryanair.  In October 2017 McGinley told him he had to set up an Irish limited company through which to provide his services, and that they wanted him to use one of three Irish accountants to do this.  Eventually he was “installed” into an Irish limited company called Dishcloth (or something).  He started flight training in December 2017 and passed in February 2018.  In April 2018 he signed an agreement with McGinley for the supply by Dishcloth, to McGinley, of services to Ryanair.  He started flying from Stansted for Ryanair in August 2018.  For the next 16 months he repeatedly asked to be taken on as employed, rather than contracted, crew.  In December 2019 he became agitated during a tape-recorded phonecall to Ryanair’s rostering department.  McGinley informed him that it was “impossible for the commercial relationship between Dishcloth and McGinley to continue.”  The Employment Tribunal found that this was in fact Ryanair sacking him.

Mr Lutz brought a claim against Ryanair for damages for not giving him the same working and employment conditions as employed pilots, contrary to the UK and EU agency workers legislation referred to earlier.

He also brought a claim against McGinley – the intermediary – for holiday pay, on the basis that he worked for McGinley and therefore they owed him paid holiday under UK and EU civil aviation working time legislation.

In a scathing judgment in 2022, the Employment Tribunal found that, in reality, McGinley did not procure anyone to be a pilot.  Ryanair advertised for, and assessed, pilots.  Those they approved were sent to McGinley to process.  Ryanair were on the hook for the agency worker discrimination claim.

Nevertheless the Employment Tribunal found that there was an employment relationship between McGinley and the pilot.  The Irish limited company – Dishcloth – was a fiction.  (The Court of Appeal later called the sham arrangements “distinctly unsatisfactory”. )  So McGinley was on the hook for the holiday pay.

Though the tribunal’s reasoning was criticised in some respects by the EAT and Court of Appeal, the disposal was upheld and none of the factual findings seem to have been overturned.

The result of the ET and EAT proceedings was that McGinley employed the pilot and so owed him paid annual leave under the civil aviation working time legislation; and both Ryanair and McGinley were liable to the pilot under the agency workers legislation for the less favourable treatment he received compared to a direct hire.

The appeal

McGinley, who described themselves to the Court of Appeal as in essence no more than a payroll administrator, seem to have been left holding the baby.  McGinley may have been surprised to learn that it was an employment agency.  Ryanair, for its part, may have been surprised to learn that its pilots were agency workers.  McGinley and Ryanair both appealed. 

On the issue of whether the employment agency was the pilots’ employer, the Court of Appeal applied James v. London Borough of Greenwich [2008] EWCA Civ 35: once the sham company (Dishcloth) was put to one side, the agreement was simply an agreement between the agency and the pilot.

On the issue of whether the pilot was an agency worker, the Court of Appeal held that he was.  He had been supplied to work for Ryanair temporarily and for a fixed term.

Comment

In Uber BV v. Aslam [2021] UKSC 5, the Supreme Court held (in broad terms) that Uber drivers were workers within the meaning of certain employment legislation, notwithstanding the fact that the parties (Uber and the driver) had specifically agreed that the drivers were not workers.  The theoretical justification for this (paragraph 69 of Uber) is that employment / work relationships are regulated by legislation; so the consequences of what the parties have agreed are not just a matter of contractual interpretation; they are a matter of statutory interpretation.

So, contractual arrangements intended to avoid or bypass employment legislation will always run the risk of turning out to have been too clever by half.

About the Author

Ben Rodgers was called in 2007 and now specialises in personal injury work with an emphasis on accidents abroad, including maritime accidents (he is himself an excellent sailor). He is listed for personal injury in the Legal 500, where he is said to be ‘go-to counsel for complex liability disputes; calm and composed, but will fight ferociously when required.’

Casenote: Wei & Others v Long & Others [2025] EWHC 1799 (KB)

At a recent hearing Hill J considered whether to order a payment on account of costs, and if so in what sum. The decision is instructive for all litigators wishing to recover their costs in a timeous fashion; and all those who seek to avoid overpaying on account.

The facts and merits of the underlying claim are irrelevant for our purposes. Suffice to say that the four claimants brought proceedings for harassment and various other causes of action arising out of defamatory internet posts for which four defendants were said to be responsible. The claim against the first defendant succeeded on the basis of a default judgment; the claim against the second defendant was discontinued with no order for costs; and the claim against the (Californian) fourth defendant failed for want of jurisdiction.

On 2^nd May 2025 the claimants served Notice of Discontinuance on the third defendant. The sole issue remaining for adjudication related to the costs of that claim, and specifically whether to depart from the general rule set out in CPR Part 38.6 that a discontinuing claimant is liable for the costs which a defendant has incurred up to the date that the Notice of Discontinuance was served.

The claimants contended that the third defendant should pay their costs, because they were driven to bring the claim against it and they had emerged successful from it, having secured their primary objectives in that the third defendant had provided them with the information they sought about those responsible for the posts and  agreed to remove the posts in question. In addition, so the claimants contended, the third defendant had behaved unreasonably. Alternatively, they argued that there should be no order as to costs.

At paragraph 9 of the judgment Hill J reminded herself of the guidance of the Court of Appeal in Brookes v HSBC Bank [2011] EWCA Civ 354:

(1) when a claimant discontinues the proceedings, there is a presumption by reason of CPR 38.6 that the defendant should recover his costs; the burden is on the claimant to show a good reason for departing from that position; 

(2) the fact that the claimant would or might well have succeeded at trial is not itself a sufficient reason for doing so;

(3) however, if it is plain that the claim would have failed, that is an additional factor in favour of applying the presumption;

(4) the mere fact that the claimant’s decision to discontinue may have been motivated by practical, pragmatic or financial reasons as opposed to a lack of confidence in the merits of the case will not suffice to displace the presumption;

(5) if the claimant is to succeed in displacing the presumption he will usually need to show a change of circumstances to which he has not himself contributed;

(6) however, no change in circumstances is likely to suffice unless it has been brought about by some form of unreasonable conduct on the part of the defendant which in all the circumstances provides a good reason for departing from the rule.

Hill J did not accept the claimants’ case that they had emerged victorious from the abortive claim against the third defendant. On the facts, they had not succeeded in obtaining all of the disclosure they desired from the defendant. Moreover, the posts complained of had been deleted pre-proceedings and it therefore could not be said that the deletions had occurred in response to the litigation. Furthermore, the defendant had not behaved unreasonably; it ‘was entitled to ask that the claimants apply for a court order before it disclosed the personal data of its users. This was not unreasonable conduct: rather, it reflected D3 acting as a responsible website operator, following its privacy policies.’ Lastly, the judge considered that the claim against the third defendant was unlikely to succeed in any event, strengthening the presumption in favour of the claimant paying the third defendant’s costs on discontinuance.

Accordingly, the claimants, as parties who had discontinued their claims, were found liable for the third defendant’s costs incurred on or before the date on which the Notice of Discontinuance was served on them, namely 2^nd May 2025 (and, given that they had lost on the issue, the costs thereafter). The third defendant therefore sought an order that the claimants pay its costs, summarily assessed on the standard basis in the sums of £116,668 (plus £11,302 VAT) and US$21,501.60 within 14 days. The claimants opposed the summary assessment of costs on the grounds of the level of costs claimed, which they contended were exceedingly inflated, unreasonable and disproportionate. Hill J agreed that ‘assessing D3’s costs of the claim would be far from straightforward. There have been a number of applications made by both parties in the litigation. D3 relies on five costs schedules involving three law firms, two in the UK and one in the US.’ Furthermore, there were criticisms of the costs schedules which appeared on the face of them to be credible and which required further exploration.

There remained the question of whether the claimants should make a payment on account of costs. CPR Part 44.2(8) provides that “Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so”

The claimants contended that there were a series of good reasons not to order a payment on account of costs in this case, namely

(i) the fact that they were drawn into this litigation by serious tortious conduct, which has had very serious consequences for the mental and physical health of the first and second claimants;

(ii) the significant financial difficulties the protracted nature of the litigation had caused them, in particular because of the fact they have had to meet significant costs since December 2024, including £58,185.50 to be paid to the fourth defendant;

(iii) the delay in enforcing the judgment against the first defendant in the United States; and

(iv) the additional time they will need to raise further funds in order to make the payment.

Hill J accepted that these were good reasons to allow additional time for a payment on account to be made, but not sufficiently good reasons to refuse to order a payment on account at all.

As to the amount of any payment on account, the third defendant accepted that the US lawyers’ fees and the VAT element sought were particularly contentious as far as the claimants were concerned and so excluded those sums from consideration. It posited that a figure consisting of 60% of the remaining costs was appropriate, bearing in mind that the costs were unbudgeted. The claimants proposed much lower figures, namely 10% of the total costs.

Hill J, bearing in mind that payments on account in the region of 90% ‘are often ordered’, agreed that the 40% discount proposed by the third defendant was appropriate and made an order for the claimants to make a payment on account of 60% of the defendant’s costs, excluding the highly contentious elements. She acceded to the claimants’ request for a payment period of ten weeks.

Comment

The outcome in this case is a useful reminder that where a claim is discontinued the usual rule is that the claimant must pay the defendant’s costs of the litigation, and that this rule is rarely displaced. Furthermore, where an order for payment of costs to be assessed is made, the court will usually accede to any application for a significant sum to be paid on account, and orders of 60% to 90% of costs are routinely made. Any party seeking a payment on account of costs should attend the hearing of its application armed with figures reflecting a reasonable proportion of costs likely to be uncontentious in principle.

About the Author

Called to the Bar in 1997, Sarah Prager KC has been listed in the legal directories as a Band 1 practitioner in travel law for many years, and, more recently, listed in aviation as well. Together with her colleagues at Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.