The Case
On 16 September, the Supreme Court handed down its decision in Commissioners for Her Majesty’s Revenue and Customs v Professional Game Match Officials Ltd [2024] UKSC 29 (“PGMOL”). PGMOL concerned the employment status of part-time football referees who were refereeing English domestic football matches, generally those in the Championship, Leagues 1 and 2, and cup matches (Premier League matches generally being refereed by full-time referees employed by PGMOL under formal contracts of employment). The Supreme Court has given a strong indication that such referees are employees for the purpose of each individual engagement to referee a match.
The referees with which PGMOL was concerned are those in the ‘National Group,’ which comprises part-time referees who have full-time jobs, but who combine this with refereeing at an elite level on weekends. It was described by a former Managing Director of PGMOL as a very serious hobby, but one which is fitted around other paid work and which did not pay the bills. Such referees are paid match fees for the individual games which they officiate, together with being paid small amounts for certain compulsory training sessions. The referees have individual coaches supplied by PGMOL, officiate wearing kit provided to them, although they supply their own boots, whistles, and cards. Referees have to comply with general FA Regulations, together with specific match-day procedures, and could be disciplined or demoted for failures to do so, or, for other matters, such as failure to meet fitness standards.
At the start of the season, the referees are appointed to the National Group, but are not guaranteed any matches thereby. Instead, individual match appointments are offered to referees on a Monday for the following weekend, and referees can accept or refuse such appointments. Once they accept however, a contract is formed between PGMOL and the referee for the referee to officiate the game, and thereafter to submit a match report, and for PGMOL to pay him or her a match fee for doing so (although both the referee and PGMOL were entitled to terminate the contract prior to the match without formal sanction). Once the match report had been submitted, the referee’s engagement was at an end.
PGMOL and the referees had operated on the basis that the referees were self-employed, however HMRC contended that the referees were employees, and should be taxed as such. The argument was put on two bases: (i) that there was an overarching or umbrella contract of employment lasting throughout the season and between engagements; or (ii) that each individual engagement for a single match amounted to a contract of employment for that assignment.
The First-Tier Tax Tribunal held that in respect of both the umbrella contract and the individual engagements there was insufficient mutuality of obligation or degree of control for an employment contract to be found, pointing to the lack of an obligation to offer and accept work, and the inability of PGMOL to interfere in the referees’ performance of their duties during matches. On appeal the Upper Tribunal considered that the FTT had erred as to its analysis of control, but upheld its decision as regards mutuality of obligation, such that employment contracts did not arise. HMRC had more success on appeal to the Court of Appeal, which considered that although the lack of an obligation to offer and accept work was fatal to a finding that there was any umbrella contract of employment, during the course of each engagement the referee owed a contractual duty to perform his role, and PGMOL had a duty to pay for such work. The Court of Appeal therefore decided that there was sufficient mutuality of obligation as regards the individual contracts. As to the level of control, the Court of Appeal criticised the FTT’s approach to the issue, noting that an inability to directly interfere in specialist tasks did not negative the level of control required for an employment relationship to be found, and suggested that the level of control could be be exercised by PGMOL in other ways, and remitted the issue to the FTT.
PGMOL appealed to the Supreme Court, but HMRC did not cross-appeal as to the umbrella contract, such that the Supreme court only had to consider the individual engagements. In the Supreme Court Lord Richards delivered the only judgment. He emphasises that while mutuality of obligation and control are necessary conditions for a finding of a contract of employment, they are not sufficient. Instead, if sufficient mutuality and control are found, the court should continue to examine all the terms and circumstances of a contract, including continuing to assess the level of mutuality and control, to determine whether a contract of employment exists in all the circumstances. He points out that the tendency to treat these two elements as determinative has sometimes led Courts to suggest that they amounted to more onerous requirements than was truly the case, in order to avoid finding contracts of employment. [30-34]
Analysing the contracts in PGMOL, Lord Richards held that the core of the mutuality of obligations condition was the ‘wage-work bargain,’ namely an obligation to perform work and to be paid for it. [40] He noted that while with respect to umbrella contracts there might be a focus on whether any obligation existed to offer work to employees, this was not relevant with respect to individual engagements, since for each engagement the referee had promised to perform work, and PGMOL had promised to pay for it, and this was not prevented by the fact that each had a right to terminate, since the obligations subsisted unless such termination occurred. [49]; [56-57]
With respect to control, Lord Richards noted that in many skilled and specialised roles, there will be no ability for an employer to directly interfere in an employee’s work, giving the example that a hospital administrator would not be able to interfere in a surgeon’s conduct of an operation, but this did not mean that no employment contract arose. Lord Richards noted that the key was whether there was control “in a sufficient degree to make that other master” (citingReady Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497), therefore this was a flexible requirement tailored to the individual circumstances. Lord Richards held that such control was present in relation to the referees’ individual engagements through the framework of overarching supervision it had, including the imposition of a fitness protocol, a match day procedures document, and a code of conduct, and the ability to coach and assess referees, with such assessment capable of resulting in sanctions such as the removal from the list, or additional performance payments determined at the end of the season. Although such assessment and sanctions occurred after the individual engagement had ended, Lord Richards held that they were still of practical significance during the engagement, since they “played a significant part in enabling PGMOL to exercise control over the referees in the performance of their duties, on and off the pitch.” [88]
Lord Richards therefore found that both mutuality of obligations and control were present, however in line with his previous comments, he noted that this was not sufficient to conclude that an employment relationship existed, and remitted the case to the FTT to consider whether all the circumstances of the individual engagements (including the level of mutuality and control) justified a finding of a contract of employment. [93] Given the various findings made however, it seems likely that an employment contract will be found.
Comment
In the employment law world, the majority of cases as to whether employee (as opposed to worker) status arises focus on the question of umbrella contracts, since most rights predicated on employee status (most notably unfair dismissal and the right to redundancy payments) depend not only on a finding that the workers are employees, but also that they have sufficient continuity of service for such rights to arise. As a consequence, a finding that a contract of employment exists in relation to each individual engagement will often not assist a worker.
In certain cases however, a separate question may arise as to whether the contracts governing each particular engagement amount to standalone contracts of employment, whether because back-to-back engagements might give rise to continuity of service, because the case concerns rights which do not depend on continuity of service, or, as in the present case, because the relevant question is the tax status of the workers for the purposes of making payments to them.
Despite PGMOL concerning the latter situation, it is of significance to both. As to the question of assessing contracts generally, PGMOL appears to lower the hurdles presented by the requirements of mutuality of obligation and control in favour of a more holistic approach, considering all the circumstances, continuing the Supreme Court’s focus on the practical reality of employment situations as signalled in cases like Autoclenz Limited v Belcher [2011] UKSC 41 and Uber BV v Aslam [2021] UKSC 5, even though PGMOL considered a purely common law definition of employment, in contrast to a focus on the legislative framework and purpose that characterised Uber in particular.
In relation to individual engagements, PGMOL appears to significantly increase the chance that these will amount to contracts of employment, since it emphasises that there need be no long-term on ongoing mutuality of obligation, and stresses the flexible nature of the control test. This could have significant tax implications for employers, in particular with respect to employers’ NI contributions. Such individual engagements are relatively common in the sports world whenever part-time or semi-professional athletes are involved, and this decision may have particular ramifications as to how sports clubs and bodies pay players and athletes in anything other than fully professional contexts, and could lead to clubs facing an increased tax burden to engage players on a pay-as-you-play basis. The decision may have a disproportionate impact of women’s sport, and more minor sports, where such arrangements are commonplace as sports strive towards full professionalism.
