Determining whether or not an individual is an employee is important for both tax and workplace rights. However, making that determination is not always straightforward.
This was demonstrated clearly in the recent decision of the Supreme Court in Professional Game Match Officials Limited (PGMOL) v HMRC. Despite it taking well over a year, and five Supreme Court judges to come up with an answer, we still don’t know for sure whether the football referees involved really are employees.
The background
PGMOL provides referees and match officials for football competitions in the UK, including the Premier League and FA Cup. The case concerns whether a group of part time referees should be treated as employees of PGMOL for tax purposes.
Each season, the referees in question enter into an overarching contract with PGMOL to say they are willing to officiate at matches. This does not oblige PGMOL to offer any work or the referees to accept what is offered. Instead, during the season, individual match appointments are offered to the referees who are then able to accept or refuse the offer. Once an appointment had been agreed, both the referees and PGMOL can still withdraw, at which point no fees would be payable by PGMOL.
It was common ground that the overarching, season-long contract was not one of employment. Instead, the case focused on whether the individual contracts formed each time an offer of a match appointment was accepted by a referee were contracts of employment.
The employment status tests
Difficulties in determining employment status arise as neither tax nor employment law define who is an ‘employee’. Instead, we have to turn to the following tests, which have been developed over time through various cases:
- Mutuality of obligation – are there sufficient obligations for the engager to provide work and for the worker to perform that work?
- Control – does the engager have sufficient control over the worker for the relationship to be employment?
- The wider picture – even if there is sufficient mutuality of obligation and control, does the overall arrangement look more like employment or self-employment?
What did the Supreme Court say?
The Supreme Court held that there was sufficient mutuality of obligation and control for the individual contracts to indicate employment.
In coming to this conclusion, they noted that:
- A contract of employment can exist that covers only the period while an employee carries out work for which they are paid.
- There is no need for mutual obligation to exist before an engagement starts (e.g. before the referee arrives at the ground).
- The right to terminate is not relevant to the test of mutuality - just because both PGMOL and the referees could cancel an engagement without penalty, it did not mean that there was no mutuality of obligation while the contract remained in place.
- An employer does not need to have a contractual right to intervene in every aspect of an employee’s duties in order to have control.
- The combination of contractual obligations imposed on referees before, during and after a match by PGMOL was sufficient to meet the control test.
Even though the first two employment tests were met, the Supreme Court made it clear that did not mean that the referees were definitely employees. Instead, the third test of looking at the wider picture also needed to be considered – control and mutuality alone are not enough.
Frustratingly however, the Supreme Court did not themselves go on to consider the third ‘wider picture’ test. Instead, the case has been sent back to the First-tier Tribunal. It will now be for them to decide whether or not the referees are indeed employees, and blow the final whistle in this long running match.
This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.
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