Employment status: Are football referees employees?

The Supreme Court has handed down its long-awaited judgment in the case of Commissioners for His Majesty's Revenue and Customs (HMRC) v Professional Game Match Officials Ltd (PGMOL), which considered the employment status of part time referees.

Background

PGMOL provides and trains referees for high level football competitions in England. The referees are appointed annually and tend to officiate at matches in the Championship League and the FA Cup.

PGMOL’s mechanism for engaging referees is through a software system. A request to officiate a weekend game is usually made to the relevant referee via the system on the preceding Monday. The referee could refuse the request but PGMOL would want to know the reason for the refusal. Once a referee has accepted an appointment, they could withdraw before match day, but would generally only be able to do so as a result of injury, illness or work commitments. PGMOL can make changes after a match appointment had been accepted. When a referee accepted a match appointment offered by PGMOL, a contract was formed under which the referee agreed to officiate and submit a match report and PGMOL agreed to pay the appropriate fee. If the referee did not attend the match, the contract would fall away, without any sanction being imposed, and no match fee would be payable.

The Legal Bit

The key question that the Supreme Court had to determine is whether the tests for an employment relationship were met. In the particular circumstances of this case, that meant that the two key elements that the Supreme Court had to determine were whether:

(1) There is a mutuality of obligation – is there an obligation on the part of the organisation to offer work and for the worker to accept it and provide their personal service in return for payment by the employer.

(2) There is a sufficient degree of control by the organisation over the worker

Before reaching the Supreme Court, the case had proceeded through the First Tier Tribunal (FTT), the Upper Tribunal and the Court of Appeal.

The first two of these decided in favour of PGMOL finding that the relationship lacked the requisite mutuality of obligation (and, according to the First Tier Tribunal only, control) to mean that the referees were employees; consequently, their fees would not be classed as employment income and therefore subject to income tax and National Insurance contribution deductions.

The Court of Appeal disagreed with the lower Tribunals and found in favour of HMRC, reaching the opposite conclusion in relation to the issues of mutuality of obligation and control.

The Supreme Court Decision

The Supreme Court agreed and upheld the Court of Appeal decision, holding that sufficient mutuality of obligation may exist even if parties’ obligations are only in existence during the period when the employee is working for the employer on a specific assignment. The Supreme Court held that the parties’ obligations in the period from the referees arrival on Saturday to the submission of the match report on Monday would satisfy the requirement for sufficient mutuality of obligation. It further held that a referee and PGMOL were under mutual contractual obligations from an earlier point, namely the time early in the week that the referee accepted the offer of a match on the Saturday of that week. This was irrespective of the fact that either party had the right to cancel the engagement without penalty. Lord Richards held that the core of the mutuality of obligations conditions was the “wage work bargain” namely an obligation to perform work and to be paid for it.

In relation to control, the Supreme Court held that the combination of contractual obligations imposed on referees as to their conduct generally during an engagement from the time the match was accepted to the time when the match report was submitted and as to their conduct during the match was capable of giving PGMOL a sufficient “framework for control” to meet the control test. It considered the framework of overarching supervision, the imposition of fitness protocol, match day procedures document and a code of conduct procedure. Lord Richards held that they “played a significant part in enabling PGMOL to exercise control over the referees in the performance of their duties, on and off the pitch.”

This is not the end of this long-running litigation as the case has now been remitted to the FTT to determine the final, overarching, element of the employment status test; whether, in the light of all relevant circumstances including the Supreme Court’s findings on mutuality and control, the individual contracts are properly characterised as contracts of employment.

Conclusion

This case highlights the importance of reviewing all of the circumstances to determine employment status. There is no one single factor which will determine whether an individual is employed or self employed, all of the facts and circumstances must be considered, including the contractual terms and the reality of the situation. If a correct assessment is not made then the employing organisation could be subject to significant liabilities if an employee has been incorrectly treated as self-employed. As well as the tax implications highlighted by this case, employment status also brings significantly enhanced rights such as unfair dismissal and TUPE protection, redundancy pay, holiday pay and family-friendly rights.

On the Horizon

Employment status is something the new Labour government has committed to reviewing as part of its Plan to Make Work Pay, indicating that it would move from the current “three tier” classification system of employees, self-employed contractors and workers; and move to a simpler two-tier position without the “intermediate” status of “worker”. Workers currently sit between the other two categories in terms of the rights and protections afforded to them. The government’s stated aim is to try to irradicate the current situation whereby “workers find it difficult to get a clear picture of where they sit and what protections they are owed, while business can also struggle to properly place staff and comply with legal obligations.”
Such changes will be seismic for the world of work and the details are awaited with keen interest by employers and their HR and employment law advisers. We expect these will come as part of the Employment Rights Bill scheduled to be released by 12 October when the government reaches 100 days in power,