Recently in the Supreme Court case of Commissioners for HMRC v Professional Game Match Officials Ltd [2024] UKSC 29, the court considered whether or not contracts for individual football matches between Professional Game Match Officials Ltd (PGMOL) and part-time referees were contracts of employment and consequently whether or not these individuals were considered employees.
Background
The claim arose after His Majesty’s Revenue and Customs (HMRC) took the view that the part-time referees were in fact employees and, consequently, PGMOL should have been treating these individuals as employees and not as self-employed individuals for tax purposes.
PGMOL is an administrative body that provides referees for professional football matches in England (including for Premier League matches). PGMOL provide full-time referees, who they hold a contract of employment with, and they also have a pool of part-time referees, who typically have jobs outside of their referee role.
The part-time referees are contracted to PGMOL’s pool of referees on an annual basis, following which they are engaged by PGMOL to officiate individual matches. For each match, a separate contract is then put in place which starts from when they were booked in by PGMOL to officiate the match and ends once the match report has been submitted to PGMOL.
The Law
There are the three key categories of employment status in the UK: employees, workers and self-employed. Knowing an individual’s employment status is important not only for the individual themselves but also for their employer as it impacts their employment rights (which in turn impacts the employer’s obligations to them) and also carries tax implications (which is the basis of the Supreme Court case).
Employment rights
Employees enjoy a full suite of employment rights including but not limited to the right:
– not to be unfairly dismissed;
– to statutory maternity, paternity and adoption leave and pay;
– to statutory parental leave;
– to statutory sick pay; and
– to request flexible working.
Workers do not have the full suite of employment rights compared to employees, however, they do enjoy some of these rights including: the right to receive the national minimum wage, whistleblowing protections and the right not the be subjected to unlawful discrimination under the Equality Act 2010.
Self-employed on the other hand do not have the above rights.
Impact on tax position
From a tax perspective, it is important for employers to determine the employment status of their staff to ensure that they are paying the appropriate tax and national insurance contributions. If an individual is self-employer, however, then they will be responsible for their own tax payments.
How do I know whether they are an employee, worker or self-employed?
There is a three-step test for determining an individual’s employment status:
1. Is there mutuality of obligation? i.e. Did the referees have to perform the work personally and were PGMOL obligated to provide them with payment for this work?
2. Is there a sufficient degree of control? i.e. Did PGMOL have sufficient control over the referees when they were performing in their role?
3. Are the other provisions of the contract and the employment relationship consistent with an employment relationship? This will be dependent on the facts of the case.
Tribunal Timeline
First Tier Employment Tribunal Finding
The Employment Tribunal (ET) found in favour of PGMOL. It acknowledged that there were contracts between PGMOL but that there was insufficient mutuality of obligation as both parties had the ability to cancel their shifts without incurring a penalty (pun unintended but thoroughly enjoyed). It took the view that these were not contracts of employment and it also found that there was no sufficient control over the work undertaken by referees (referencing to PGMOL’s lack of ability to intervene during a match) .
The ET’s finding was appealed by HMRC.
Upper Tribunal Finding
The Upper Tribunal disagreed with the ET’s finding that there was insufficient control over the referees. However, the EAT did agree with the ET’s conclusions regarding mutuality of obligation. As this limb of the test was not satisfied, HMRC’s appeal was rejected.
The HMRC raised a further appeal to the Court of Appeal.
Court of Appeal
The Court of Appeal allowed HMRC’s appeal and concluded that there was sufficient mutuality of obligation. It accepted that the parties were able to cancel the contract at any point before the match but found that whilst the contract remained in place, there was sufficient mutuality of obligation to meet this element of the test.
The Court of Appeal further rejected the First Tier Tribunal and Upper Tribunal’s findings that there was an insufficient degree of control of the referees.
PGMOL appealed this outcome and the case was subsequently taken to the Supreme Court.
Supreme Court judgment
The Supreme Court agreed with the Court of Appeal’s determination that there was mutual obligation between the parties, irrespective of the fact that this could be cancelled by either party, from the time that the referee accepted the offer to officiate the match up to when the match report was submitted.
It also concluded that there was a sufficient degree of control over the referees given the contractual obligations imposed on them regarding their conduct during the duration of the contract. It also considered that:
• PGMOL required part-time referees to undertake a fitness test and attend an introductory seminar when joining the pool of referees;
• The part-time referees were given match-day procedures and a code of conduct by PGMOL which they were required to act in accordance with (and if these are not met, PGMOL are able to discipline them accordingly);and
• The even management system used by PGMOL when offering matches to the referees was similar to the systems used by other sports clubs when scheduling in casual members of staff (e.g. stewards).
The Supreme Court therefore found that the first two limbs of the test for employment status were satisfied and has remitted the case to the First Tier Tribunal to address whether the individual contracts will meet the third element of the test (i.e. whether the other provisions of the contract and the employment relationship consistent with an employment relationship) and are therefore contracts of employment.
What can we learn from this?
Whether or not the referees were employees has still yet to be determined by the ET and will in any case be fact-specific. That being said, it is worth employers being live to the fact that engaging individuals on separate occasions for similar work could well be considered contracts of employment which will impact both their employer and tax obligations.
