In UK employment law there are different categories of worker status. Working individuals are categorised depending on the nature of the relationship they have with the company they work for or with. An individual doing work for a company could be self-employed, with the company as their client, they could be a worker for the company, or they could be an employee of the company. Employees are afforded the most protection under employment law, including protection from unfair dismissal.
In order to be an employee, there must be a contract of employment between the individual and the company they work for. Usually there is an agreement between the company and the individual expressly identified as a contract of employment, but in some cases the agreement will not be so explicit. In cases where it is unclear whether a contract of employment is in place, there are legal tests to assess whether the arrangement between the parties amounts to a contract of employment. Broadly, this entails assessing whether the arrangement requires the individual to undertake personal service for the company, and the degree of control which the company can exercise over the individual.
This is an area of law which is often assessed in Courts and tribunals, therefore the case law continues to develop as the question of when an arrangement amounts to a contract of employment is revisited again and again.
Part-Time Referees
In a further case on this issue, the Supreme Court considered whether part-time football referees were employees of their administrative body, Professional Game Match Officials Ltd (PMGO) in the case of Commissioners for His Majesty’s Revenue and Customs v Professional Game Match Officials Ltd. This was in the context of deciding the tax liabilities of PMGO, if the referees were employees then PMGO was required to pay tax and National Insurance contributions as their employer.
The referees worked part-time and were appointed annually. Opportunities to referee matches were offered via a software system, usually on the Monday before a weekend game. A referee could refuse a booking, but PMGO would usually request the reason for refusal. Once a referee had accepted a booking they could cancel before arriving at the grounds on match day but would generally only do so if they were injured, ill or had other work commitments.
When a referee accepted a match, a contract was formed under which they agreed to officiate and submit a match report and PMGO agreed to pay the appropriate fee. If the referee did not attend, there would not be any sanction but no match fee would be payable. PMGO could take disciplinary action against a referee for breach of procedures, and this could result in the referee not being offered further matches and removal from the national list of referees.
In the Judgment in this case, the Supreme Court set out the minimum requirements for an arrangement to amount to a contract of employment. The Supreme Court stated there had to be a mutuality of obligation (an obligation for the employee to work personally and for the employer to provide payment for this work) and a sufficient framework of control for the employer to exercise over the employee.
The Supreme Court decided that the referees were employees for the purpose of the legislation governing tax and national insurance liability. The Court considered that the parties had obligations to each other during the period of engagement, from the time the match was accepted to the time the report was submitted, satisfying the requirement for a mutuality of obligation. Despite the fact that referees could cancel before a match without penalty, whilst the contract was in place there were mutual obligations between the parties.
The Court also found that the contracts gave PMGO a sufficient framework of control to amount to contracts of employment, as the referees had specific obligations under the contracts regarding their conduct and PMGO could impose sanctions for misconduct.
The Court further stated that, once mutuality of obligation and control had been established, it is then necessary to consider the overall effect of all of the provisions in a contract and the working relationship created by it. The Supreme Court therefore remitted the case back to the first-tier Tribunal to decide whether the contracts were contracts of employment in light of all the relevant circumstances.
It should be noted that this case considered the employment status of referees in the context of deciding the tax liability of PMGO. It is not an employment tribunal case and the considerations for determining whether a contract of employment is in place may differ in employment law cases. However, the case is still noteworthy as it sets out the broad principles used by Courts to decide whether an individual is an employee. Despite the sporadic nature of the work the referees did for PMGO, and the liberties the referees had to refuse and cancel appointments without penalty, the Supreme Court decided that there was still a sufficient mutuality of obligation and level of control for the referees to be classed as employees.
This blog was written by Yavnik Ganguly, Solicitor at didlaw.
