Employers who engage workers on a temporary, event-driven, or ad-hoc basis could face significant financial consequences following a recent ruling on the employment status of part-time football referees. Whilst the case focused on the tax implications, the judgment could also be relevant to determining the employment rights of workers with similar arrangements.
In the case of HMRC v Professional Game Match Officials Ltd [2024] UKSC 29 (16 September 2024), the Supreme Court held that two essential elements of the employment status test had been met for part time referees who were engaged under contracts to officiate individual football matches in respect of tax years 2014-15 and 2015-16.
The facts of the case
Professional Game Match Officials Ltd (PGMOL) provide referees for major professional football matches in England and engage a set of full-time referees under contracts of employment, and a pool of referees who officiate matches in their spare time (some of whom have other full-time employment).
This case involved part time referees who were appointed to the pool on an annual basis and were required to pass a fitness test and attend an introductory seminar. They were also provided with a match-day procedure document and a code of conduct. An event management system was used to offer matches to referees and once a match had been accepted by the referee, they were effectively “booked” for the match.
PGMOL treated them as self-employed and did not treat the fees paid to them as employment income. HMRC disagreed.
Factors relevant to determining employment status
There are key elements to determining an employment relationship and these were applied as follows:
- Mutuality of obligation – did the referees personally have to perform the work in exchange for payment?
- Control – whether PGMOL exercised a ‘sufficient framework of control’ over the referees such that the relationship was one of employment.
The final element of the test to determine an employment relationship is whether the other contractual provisions and the whole relationship between the parties is consistent with it being a contract of employment.
Summary of the Tribunals and the Courts decisions
HMRC argued that both the overarching and individual contracts were contracts of employment.
The decisions of the Tribunals and the courts below the Supreme Court were that:
- The First-tier Tribunal found in favour of PGMOL asserting that due to referee’s rights to cancel shifts meant there was insufficient control over the referees and therefore no mutuality of obligation for there to be an employment contract. The decision was appealed.
- The Upper-tier Tribunal agreed and dismissed the appeal (although it disagreed on the control element).
- The Court of Appeal allowed HMRC’s appeal and found there was sufficient mutuality of obligation and control in respect of the contracts between the referees and PGMOL of each individual match but not in the overarching contracts.
PGMOL appealed to the Supreme Court on the two elements of the test to determine the employment relationship.
Supreme Court’s Judgement
Mutuality of obligation
The Supreme Court held that there was sufficient mutuality of obligation and control for the individual contracts to potentially constitute contracts of employment. The case has been remitted to the FTT to determine whether the other provisions of the contract are consistent with it being an employment contract.
PGMOL argued there was no mutuality because the referees and PGMOL could cancel match engagements without penalty before the match took place. However, the Supreme Court ruled that once a referee accepted a match appointment, mutual obligations existed until the match was completed and the report submitted.
Control
PGMOL argued that referees were independent while officiating and were not under their control during the match. However, the Supreme Court found there were contractual obligations imposed on referees to meet relevant standards through the match-day procedure documents and the code of conduct, and if they were not met then PGMOL could discipline them. Control did not need to be absolute or exercised continuously and what mattered was that there was a sufficient framework of control over the worker.
Conclusion
This ruling underscores that mutuality does not require long-term, continuous obligations. Even if engagements are short-term, such as for one football match, there can still be mutuality of obligation for the duration of that engagement.
Control doesn’t have to involve direct supervision of every task and can be exerted through procedures.
This finding is important for employers engaging workers on a temporary, event-driven, or ad-hoc basis, as mutuality can exist within each individual engagement.
Summary
In this case, the question was whether the fees paid to the referees should be subject to employment taxes. However, the question of whether a contract amounts to a “contract of employment” is key to determine several rights, including unfair dismissal rights, rights to redundancy payments and rights in relation to trade union membership.
The Labour government has unveiled the new Employment Rights bill where employees now have day one rights, such as unfair dismissal protection. However, this could increase the risk profile of misclassifying someone as self-employed, meaning that decisions like PGMOL are important to consider.
For help and advice on this topic or related issues, please get in touch with Chris Cook by calling 01727798146 or emailing chris.cook@salaw.com.
