Impact of AWR on latest method of hiring pilots

[NadJ]

Hello Peeps,

I left IT contracting last year to take up my new post in the Aviation world. I left at around the time AWR was being introduced and although the management where I was working moved me from umbrella to Ltd quite early on (they had obviously shat their pants nice and early) I never really got to know the ins/outs of how this works. Could I get someone who might be qualified on the subject matter to say a few words on the following? (I know it's difficult to tell what might be going on, but at the least some guesses?)

See the below ad:

CAE Parc Aviation Recruitment and Resourcing

Don't read too much into the detail of the job ad, I can tell you how it works. This agency PARC has been hiring contract pilots on behalf of easyJet for close to 3 years now. Somewhere in the region of 2,000 pilots have been hired this way. These contract pilots are paid by the scheduled block hour they are supposed to fly which means in the winter they can be taking home less than 1/3 of what they would be during the summer! (I kid you not). Naturally then, this style of hiring and compensating staff is tremendously advantageous to the airline who offload all risk to their staff.

Interestingly, there are emails from easyJet management explaining to the staff that at the end of 3 consecutive terms (years) the contract pilots are "invited" to undergo a selection process which may result in them becoming permanent employees. This contract term is therefore pitched to all as some kind of proofing period (in reality complete BS). More importantly, written in this email from management it says: "This is our preferred method of recruitment from here on".

So my question is, how do the entities mentioned above get away with this despite AWR? Anyone aware of anything clever they might be doing?

Thanks!

[Clare@InTouch]

AWR won't apply to anyone who uses a limited company and is genuinely in business on their own account, so outside of IR35. If all pilots are using a limited company, and deemed outside of IR35 on the basis of control or lack of MOO (assuming substitution doesn't apply here) then that could be the way it works.

Or they could be self employed, so AWR again is not likely to apply.

[moggy]

AWR won't apply to anyone who uses a limited company and is genuinely in business on their own account, so outside of IR35. If all pilots are using a limited company, and deemed outside of IR35 on the basis of control or lack of MOO (assuming substitution doesn't apply here) then that could be the way it works.

Or they could be self employed, so AWR again is not likely to apply.

they are using the clients equipment, never works from home, flying where they are told when they are told and cannot substitute for another pilot - sounds like ir35 to me

[Clare@InTouch]

they are using the clients equipment, never works from home, flying where they are told when they are told and cannot substitute for another pilot - sounds like ir35 to me

I would imagine that they have control over how they fly though, subject to safety and technical requirements (control covers how, when and where - with how being the most important part). If they can be dismissed at a moments notice, and there's no obligation to accept or offer further work, there's also no MOO. Sounds like it could be outside IR35 to me

[moggy]

I would imagine that they have control over how they fly though, subject to safety and technical requirements (control covers how, when and where - with how being the most important part). If they can be dismissed at a moments notice, and there's no obligation to accept or offer further work, there's also no MOO. Sounds like it could be outside IR35 to me

They are generally told how fast at what height and which flight plan they must take though. for me I would say its a better chance of being caught than not, of course i accept that most cases will seem one way or the other to different people.

[NadJ]

OK, so after some more digging around, it turns out that the pilots become "Managing Directors" of a Ltd company in Ireland along with about 50 other "Managing Directors" for the same company (all Pilots providing services to easyJet). They have to use one of three accountants who assign them with the company name (most of which have nothing to do with aviation) and they mostly end up doing this for around 3 years saving easyJet a tonne of money no doubt.

In order to draw conclusions about IR35, another thing you must know is that these pilots are not allowed to provide services to any other airline during their term with easyJet. Why? because it chews into their FTLs (Flight Time Limitations), i.e. only allowed to fly a max of 900 hours per year which easyJet demand the pilot reserves for them (it's contractual).

[Wanderer]

OK, so after some more digging around, it turns out that the pilots become "Managing Directors" of a Ltd company in Ireland along with about 50 other "Managing Directors" for the same company

Sounds like a "managed service company" or "composite company". They used to have these in the UK but they outlawed them. Which country are you tax resident in? We generally deal with UK tax law here...

Watch that it's all above board as HMRC have a habit of letting these things run for 3 or 4 years then busting them and causing a big stink.

[NadJ]

UK born and tax resident wishing to work for this UK company.

[centurian]

these pilots are not allowed to provide services to any other airline during their term with easyJet.

Exclusivity doesn't automatically put you inside IR35 - many B2B transactions may contain exclusivity clauses.

However it certainly doesn't help - especially given the reason behind it, to secure 100% of that person's FTL allocation.

[LisaContractorUmbrella]

OK, so after some more digging around, it turns out that the pilots become "Managing Directors" of a Ltd company in Ireland along with about 50 other "Managing Directors" for the same company (all Pilots providing services to easyJet). They have to use one of three accountants who assign them with the company name (most of which have nothing to do with aviation) and they mostly end up doing this for around 3 years saving easyJet a tonne of money no doubt.

In order to draw conclusions about IR35, another thing you must know is that these pilots are not allowed to provide services to any other airline during their term with easyJet. Why? because it chews into their FTLs (Flight Time Limitations), i.e. only allowed to fly a max of 900 hours per year which easyJet demand the pilot reserves for them (it's contractual).

Definitely sounds like a managed service company - not going to be looked upon favourably by HMR&C if they are UK tax resident - also cannot see the benefit - how could they be outside IR35??