First-tier Tribunal finds that football referees are not employees – what does the latest development in the long running PGMOL case mean for employers?

In that decision, the Supreme Court found that the first two elements of the Ready Mixed Concrete test for employment status were met – namely, that there was an ‘irreducible minimum of mutuality of obligation’ and a ‘framework of control’.[i] However, it remitted the case back to the First-tier Tribunal to determine the remaining question: whether, applying the third limb of the test – the “multifactorial approach” – there was a contract of employment.   Mutuality of obligation and control are pre-conditions, but their presence does not create a presumption of employment. The multifactorial test still needs to be applied to determine if there is a contract of employment. In this case, the Supreme Court had directed that this take into account the nature of the mutual obligations and degree of control exercisable by PGMOL, along with other factors, to consider whether, taking the relationship as a whole, it should be considered one of employment.

We now have the ruling of the First-tier Tribunal, which determined that the contracts were not contracts of employment, they were contracts for services.

Although the case concerns status from a tax perspective and whether match fees received should be classed as employment earnings, it still provides helpful insight into some of the key principles relevant to the broader question of employment status, an area which continues to be difficult for employers to navigate.

Facts

By way of recap:

• PGMOL provides referees for the major professional football matches in England.
• To provide such services, PGMOL engages a set of full-time referees under contracts of employment (primarily for Premier League matches), and a pool of referees who officiate matches in their spare time (most of whom have other full-time employment).
• The case concerned the pool of part-time referees – PGMOL treated them as self-employed and therefore did not treat the fees paid to them as employment income. HMRC disagreed.
• The referees were appointed to the pool on an annual basis. In order to be appointed to the pool, PGMOL required them to pass a fitness test and attend an introductory seminar. They were also furnished with a match-day procedures document and a code of conduct.
• An event management system was used by PGMOL to offer matches to referees – much like the systems routinely used by football or other sports clubs for scheduling casual match-day staff such as stewards. Once a match had been accepted by the referee, they were effectively ‘booked’ for the match, although both the referee and PGMOL had the ability to cancel it.

First-tier Tribunal decision

The First-tier Tribunal noted that it was required to consider all the relevant terms of the individual match engagements and the surrounding circumstances – no single factor was determinative, and it needed to stand back and consider the whole picture.

The judgement considered in detail the factors pointing towards, and away from, employment under the following headings: mutuality of obligation; control; integration; economic reality; financial risk; time commitment; dependence on a single paymaster; provision of equipment; length and continuity of relationship; exclusivity and substitution.

Focusing in on those areas of the decision relating to mutuality of obligation and control:

• It was concluded that, whilst the minimum “mutuality of obligation” necessary to form a contract was present, the obligations assumed were “narrow, short-lived and suffused with choice” and pointed materially away from a contract of employment. Factors considered included: the fact that PGMOL was under no obligation to offer any match appointments during a season; referees were under no obligation to accept appointments when offered; referees could, and did, close off dates of availability, decline appointments and prioritise primary employment or personal commitments without adverse consequence; and referees could withdraw from an appointment after accepting it up to the point of arrival at the ground. The tribunal also attached particular weight to findings that refereeing was pursued as a serious hobby alongside full time employment, that it did not ‘pay the bills’ and was fitted around primary work commitments.
• On control, although PGMOL exercised a significant regulatory framework of control, it was concluded that its nature and quality was regulatory, facilitative and developmental rather than managerial and supervisory. The tribunal placed significant weight on findings that referees retained complete autonomy in performing the core officiating function. Obligations flowed from external regulation rather than employer-imposed directions, and control mechanisms were protective and developmental rather than supervisory. PGMOL had limited disciplinary power and the broader autonomy of referees substantially constrained PGMOLS’s ability to control when, where and how work was performed.

The First tier-Tribunal considered the other factors referred to above as well. In relation to these its findings included that referees were operationally involved with PGMOL but not integrated into its organisation as employees; their professional identity and regulation lay elsewhere. Additionally, economically referees were not dependant on PGMOL and could disengage without material financial consequences.

Ultimately, the tribunal concluded that the cumulative effect of the above demonstrated that the individual match engagements were contracts for services rather than contracts of employment.

Key takeaway

This is an important case on status, highlighting just how “fact specific” each case will be.

The judgement considered in detail the factors that pointed towards, and away from, employment status. There will always be factors pointing towards employment in any engagement, but the case highlights that they must be carefully assessed and weighed up to determine whether, overall, there was a contract of employment.

Although it is a tax case, many of these considerations apply to the test of whether somebody is an employee for the purposes of employment law (noting that for the purposes of employment law there is an intermediary category of ‘worker’ as well as ’employee’ and ‘self-employed’).  We are still awaiting a government consultation on a move towards a single employment status of ‘worker’. In the meantime, employment status continues to be a hot topic.

[i] This is the test set out in the case of: Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2QB 497