Hiring of Ryanair pilots ‘not a straightforward’ arrangement

English court case sheds light on complicated employment structure at airline

 

A case to secure additional rights for contracted pilots who fly with Ryanair is being prepared for the English courts, according to a solicitor in London who was involved in a recent successful action taken by a former pilot with the airline.

Solicitor William Garnett, of London firm Bates Wells Braithwaite, said he expects cases to be taken where it will be asserted that pilots engaged through English company, Brookfield Aviation International Ltd, to fly for Ryanair are entitled to certain employee or workers’ rights, including paid holidays and certain employment protections. The rights would exist in relation to Brookfield, according to Garnett.

Brookfield is believed to supply the majority of Ryanair’s contracted pilots, who, in turn, make up a majority of the airline’s pilots.

Brookfield plays a central role in a contract arrangement that a London judge recently described as “not straightforward”.

The system owes its nature to tax law, and the large cases division of the Irish Revenue was consulted at the time it was being devised, according to Liam McNamara, of McNamara & Associates.

“It was known to the Revenue and done with their blessing,” says McNamara, who says his firm is no longer involved in supplying service companies for Ryanair pilots.

One of the key attractions of the system for Ryanair is that it shields it from the obligations created by employment law.

A copy of a standard Brookfield contract seen by The Irish Times includes a clause where the signing pilot agrees that he or she is not an employee of Ryanair or Brookfield, and will not at any time be deemed to be an employee.

It also stipulates that Brookfield is not an agent of Ryanair and has no power to bind Ryanair in any matter and that, while Brookfield will endeavour to locate work for the pilot, there is no obligation on it to do so.

It also stipulates that the contract can be terminated with the pilot if he or she publishes derogatory statements in writing or on the internet, in public or private chatrooms, about Brookfield or Ryanair.

Garnett acted for Dutch pilot Robertus Van Boekel, who flew for Ryanair between 2009 and 2011 and who successfully contested in the English courts a €5,000 claim for damages for breach of contract which Brookfield brought against him after he gave it three months’ notice.

In his judgment in the case in July, Judge Hand QC, of the Central London County Court, said that, in 2009, when Van Boekel was seeking work with Ryanair, the airline “did not wish to employ pilots directly or enter into contracts with them for the provision of their services”.

In order to fly for Ryanair, Van Boekel was asked by Brookfield to choose one firm of accountants from a list of approved Irish accountants and to use a service company provided by the firm he selected for his work with Ryanair.

This arrangement is part of a system that involves pilots being made directors and shareholders in service companies. The affairs of these companies are managed for the pilots by the selected Irish accountancy firm. A number of pilots might be director/ shareholders of the same service company.


Tax payments
The service companies are Irish-registered companies and the pilots are employees of the companies for Irish tax purposes. The service companies have contracts with Brookfield under which their pilots provide services to Ryanair.

All tax and social security payments arising from the pilots’ work for Ryanair are the responsibility of the Irish-registered services companies. If the pilots were engaged by Brookfield or Ryanair on a freelance or sole trader basis, they could be entitled to certain employee rights given that they had only one customer. This is not thought to be the case when they are engaged through the service companies.

The London court was told Van Boekel chose Dublin accountants McNamara and Associates and that it arranged for him to become a shareholder in and director of a company called Winged Foot Ltd. McNamara then handled Van Boekel’s tax affairs.

The Dutchman began flying for Ryanair in September 2009, having completed his training, and was based at Charleroi airport near Brussels. He was rostered five days on, four days off. However, he could be on standby within this pattern and was only paid for hours flown.

Invoices for his services were sent by Winged Foot to Brookfield and he was paid net of taxes, Ryanair training charges, and bank charges.

In early 2011, Van Boekel decided he wanted to move from McNamara to another approved Irish firm of accountants, CXC Consultants Exchange Ltd, of Cork.

He told Brookfield and, by late January, he had resigned from Winged Foot Ltd and been appointed a director and shareholder of Adila Management Services Ltd, a company with its registered office at the CXC offices in Cork.

In May 2011, while with Adila, Van Boekel got an offer of a job with an airline other than Ryanair and informed Brookfield of his decision to resign.

He told Brookfield’s commercial director Declan Dooney, in an email, that as he was “self-employed”, he would be taking certain days off that would mean he would not attend work after July 27th.


‘Glib witness’
However, he was told that, during his notice period, he was not entitled to the normal days off arrangement.

“Should you fail to report for duty, you will be in breach of contract and incur a penalty as well as leaving us with no alternative but to take legal proceedings against you for that breach.”

The judge heard evidence on a number of matters, including the use of the word penalty by Dooney in his correspondence with Van Boekel.

Dooney told the court that he had used the word by mistake and that the €5,000 payment was in the contract Van Boekel had signed so as to compensate Brookfield for the cost of Van Boekel’s departure.

The judge said that Dooney had been a “voluble and frequently glib witness, who, for the most part, was not telling the truth”.

He decided the €5,000 charge was not to compensate for losses but rather was an in terrorem sum designed to deter breach of contract and was a penalty which was unenforceable under English law. Brookfield is seeking leave to appeal the ruling.

Van Boekel’s was one of 11 cases the judge said he was aware of, where pilots were being sued by Brookfield for breach of contract, five of which led to default judgments against the pilots, and one of which led to Brookfield succeeding in its claim against a former Ryanair pilot.

Ryanair said it would be happy to comment but only after the outcome of Brookfield’s appeal.