The Danish Supreme Court has just held that a pilot who flew for the now bankrupt company Primera Air Scandinavia, but who had entered into an agreement about this with another company, Flight Crew Solutions, was not employed as an employee in Primera Air Scandinavia.
The case in brief
In 2017, a pilot entered into a contract with Flight Crew Solutions (FCS) to carry out flights for FCS's customers and subsequently worked exclusively as a pilot for Primera Air Scandinavia (PAS). FCS was in the business of hiring out flight crew, including pilots, to airline companies.
Under the contract with FCS, the pilot was required to, among other things, follow the customer's instructions and participate in the customer's training programmes. In turn, FCS was responsible for paying the pilot for the work performed for FCS's customers and held the right to terminate the contractual relationship with the pilot, including in cases of the pilot's breach of obligations towards FCS's customers.
During the proceedings before both the High Court of Eastern Denmark and the Supreme Court, it was undisputed that the pilot:
- exclusively flew for FCS's customer, PAS,
- was subject to PAS training, instructions and procedures and flew according to PAS rosters,
- received salary (and payslips) from FCS for the flights the pilot performed for PAS,
- had no employment contract with PAS.
On 2 October 2018, FCS terminated its contractual relationship with the pilot due to PAS's bankruptcy on the same day.
Immediately following PAS's bankruptcy, the pilot filed a claim for unpaid salary, etc., with the Employees' Guarantee Fund (LG). However, LG rejected the claim on the grounds that the pilot had not documented his employment with PAS, a requirement for coverage under section 4 of the Danish Act on the Employees' Guarantee Fund (the "LG Act").
The High Court: Not substantiated that the pilot was employed with PAS
On 9 February 2024, the High Court of Eastern Denmark, acting as the court of first instance, ruled on the case and initially noted that, according to section 4 of the LG Act, it is a condition for obtaining cover for non-paid salary, etc., that the claim is documented. Thus, the burden was on the pilot to prove that he had been employed as an employee of PAS.
However, the High Court found that it had not been proved that
the pilot had been employed as an employee of PAS (and thereby that
the pilot's claim was covered by the scope of the LG Act). The
High Court place particular emphasis on the fact that:
- it must have been clear to the pilot that the contract for the performance of pilot work was entered into with FCS (not PAS), even though PAS had, among other things, conducted the job interview with the pilot, and
- the contract between the pilot and FCS contained, among other things, provisions governing remuneration and the payment of salary as well as termination of the contractual relationship, and that the pilot and FCS had complied with these terms during the term of the contract.
In the High Court's assessment, it was not deemed decisive that the pilot had, undisputedly, been subject to PAS's training, instructions and procedures regarding the performance of his work as a pilot. The High Court also noted that a partial delegation of the right to issue instructions had to be considered necessary to fulfil the specific task and was otherwise governed by the contract between the pilot and FCS.
The Supreme Court: Not substantiated that the pilot was employed with PAS
On 6 November 2024, the Supreme Court upheld the reasoning and decision of the High Court of Eastern Denmark, concluding that the pilot had not proven he was employed by as en employee. LG was therefore entitled to deny coverage.
Read more about the judgment here.
Bech-Bruun's comments
The Supreme Court's decision emphasises the documentation requirement laid down in section 4 of the LG Act, confirming that LG lacks the statutory basis to cover unpaid salary, etc., if the claim filed with the fund is not sufficiently documented, e.g. in the form of an employment contract with or payslips from the company in bankruptcy.
The decision may also impact the employee assessment in relation to
individuals who enter into employment contracts with an Employer of
Record company to perform work for another company, typically
customers of the Employer of Record company.
Bech-Bruun represented LG in the proceedings before the High Court of Eastern Denmark (first instance) as well as before the Supreme Court.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
