hidup.uk

There have been a number of cases on employment status in recent years, and cases have considered the employment status of a range of individuals, including judges, TV presenters, delivery drivers, taxi drivers, plumbers and car valeters. These cases have held that when considering whether an individual is an employee or self-employed, you need to consider a range of factors, including how an individual is paid, whether they are obliged to perform the work personally (or whether they can provide a substitute) and the degree of risk taken by the individual.

Determining employment status

Two important factors in determining employment status are also control and whether there is mutuality of obligation. Mutuality of obligation is the obligation on an employer to provide work (and pay a wage or salary) and the obligation on an individual to accept and perform that work. Therefore, for an employee, they may be required to work Mondays to Fridays and the employer is obliged to provide work for the employee to do on those days.

Control includes the power of deciding what should be done, how it should be done, and when and where it should be done. So, again, an employee will often be told to work at a specified location, and be told to do a specific task in a specific way, between the hours of, say, 9am to 5pm. The employer thereby exercises control over what is done, when it is done, where it is done and how it is done.

The case of Commissioners for His Majesty’s Revenue and Customs v Professional Game Match Officials Ltd considered the employment status of part time football referees who were engaged by PGMO Ltd. These part time referees undertake refereeing duties in their spare time, usually alongside other employment. They are appointed annually before the start of each season, and are then appointed to individual matches (often in the Championship or the FA Cup).

An appointment for a weekend game is usually offered on the preceding Monday. A referee can refuse an appointment, but PGMO Ltd would typically want to know the reason for the refusal. Once a referee has accepted an appointment, he or she can back out of it before arriving at the ground on match day, but would generally only do so as a result of injury, illness or work commitments. PGMO Ltd can likewise make changes after a match appointment has been accepted.

When a referee accepts a match appointment offered by PGMO Ltd, the referee agrees to officiate and submit a match report and PGMO Ltd agrees to pay the appropriate fee. If the referee does not attend the match, no sanction would be imposed, and no match fee would be payable. Breach of match day procedures might result in PGMO Ltd taking disciplinary action against a referee. Sanctions range from not being offered further matches to removal from the national list of referees.

Overriding or Umbrella Contract

The case considered whether the referees were employees when appointed to individual matches. The court also considered whether there was an overriding, or umbrella, contract of employment. This second question of whether there is an overriding umbrella contract of employment is important for employment rights as a number of employment rights are dependent on the individual having been continuously employed for a certain period of time, for example to bring a claim for unfair dismissal an individual must have been employed for 2 years. Where an individual is employed on a casual ad-hoc basis a finding that an individual is an employee for each individual engagement is unlikely to be enough, as they will not be able to show that they have been continuously employed for long enough. Therefore, to bring a claim such as a claim for unfair dismissal they will normally also need to show that there is an overarching umbrella contract, which links the individual engagements, and that this overarching umbrella contract is a contract of employment.

With regard to the individual match appointments, the First Tier Tribunal found that, when a referee accepted a match appointment offered by PGMO Ltd, an individual contract was formed under which the referee agreed to officiate at the match and to submit a match report, and PGMO Ltd agreed to pay the appropriate fee. However, the First Tier Tribunal decided that this contract, governing the individual match appointment, was not a contract of employment. The First Tier Tribunal held that the individual contracts were not contracts of employment on the grounds that, first, the mutual obligations were insufficient to found a contract of employment because of the right of both parties to cancel the appointment at any time before the referee’s arrival at the ground, and, second, PGMO Ltd had insufficient control over the referees.

With regard to whether there was an overarching umbrella contract, the First Tier Tribunal decided that the pre-season documents provided to referees and communications about match fees and expenses constituted express, season-long overarching contracts between the referees and PGMO Ltd. However, it concluded that these overarching contracts were not contracts of employment as they included terms that there was no obligation on PGMO Ltd to offer matches and no obligation on referees to accept matches. There was therefore insufficient mutuality of obligation.

The case was appealed ultimately to the Supreme Court. Only the decision with regard to the contract for the individual match appointments was appealed to the Supreme Court. The decision that the overarching contract was not a contract of employment was not appealed to the Surpeme Court.

Mutality of obligation and control?

The Supreme Court considered in particular the questions of mutuality of obligation and control, and observed that mutuality of obligation and control are essential to establish the existence of a contract of employment. For the purposes of considering whether the necessary mutuality of obligations exists, the Supreme Court held that you needed to consider whether there was mutuality of obligations both for the umbrella contract and for the individual match-specific contract. These contracts had to be considered separately.

In the case of umbrella contracts, it is necessary to demonstrate the continuing existence of obligations to perform work and pay for such work (so an obligation for future matches to be offered, and an obligation on the referee to accept any future offers of work). By contrast, in the case of individual contracts, it is not necessary that mutual obligations exist before the engagement commences. When considering the contract for the individual match appointment, the Court held that it was only necessary to establish that there was mutuality of obligations during the period of the individual appointment. With regard to the referees in the instant case, the Court held that the parties’ obligations in the period from the referees’ arrival at the ground on Saturday to the submission of their match report on the following Monday would satisfy the requirement for sufficient mutuality of obligation. Further, the Court held that mutuality of obligations actually existed from the moment they accepted the match appointment, and the fact that either party could cancel the appointment without penalty did not undermine this.

The Supreme Court therefore held that that the individual engagements of referees to officiate at matches satisfied the test of mutuality of obligation. It did not matter that either party had a right to cancel the engagement without penalty; while the contract remained in place, the parties were under mutual obligations to each other.

Turning to the question of control, the First Tier Tribunal had emphasised the inability, as a matter of law as well as practice, of PGMO Ltd intervening in the performance by referees of their duties while officiating during matches. However, The Supreme Court held that it was not necessary that an employer should have a contractual right to intervene in every aspect of the performance by an employee of their duties. Equally, there were many occupations in which the employer would not have the practical ability, or probably the legal right to intervene during the performance of at least some duties so as to direct the manner in which they were performed. It was of central importance in the instant appeal that the court was considering separate contracts for each match. What needed to be shown was a sufficient framework of control as regards each contract taken separately. Sufficient control consistent with an employment relationship could take many forms and was not confined to the right to give direct instructions to the individuals concerned, The Supreme Court said that the combination of contractual obligations imposed on referees as to their conduct generally during an engagement from the time that a match was accepted to the submission of the match report, and as to their conduct during a match, was capable of giving PGMO Ltd a framework of control sufficient for the purposes of meeting the control test for employment purposes.

The Supreme Court however found that the question of mutuality of obligation and control are important factors but are not the only factors to be taken into account. The Court observed that there had been a tendency in some judgments to focus unduly on the issues of mutuality of obligation and control and to treat all other terms of the contract and the surrounding circumstances of the parties’ relationship as of less significance. However, it was necessary to consider the cumulative effect of the totality of the contractual provisions, and all the surrounding circumstances, and to view the parties’ relationship in the round. The Supreme Court held that the relationship in the round needed to be considered and so remitted the case to the First-tier Tribunal for it to decide whether, in the light of all relevant circumstances, the individual contracts were contracts of employment for the purpose of the legislation governing tax and National Insurance liability.

The First Tier Tribunal will therefore now consider the relationship in the round, and taking into account that there was sufficient mutuality of obligation and control whether the overall relationship is therefore one of employment. If the Tribunal decide that it is, then importantly it will only be deciding that the contracts for the individual match appointments are contracts of employment. It will not be deciding that the overarching umbrella contract is a contract of employment. This latter point is, as explained above, important in determining what employment rights the referees will then have. Certain rights, as the right to claim unfair dismissal require a qualifying period of service (which for the right to claim unfair dismissal is 2 years) and it is likely to be difficult for the referees to show that they have been continuously employed for this period of time when only the contracts for individual match appointments are held to be contracts of employment. However, the Labour Government is proposing that more rights become a day 1 right, including the right to claim unfair dismissal, and if this proposal is implemented this will have a significant impact on individuals engaged on an ad hoc basis, such as the referees in this case. So, we could yet see referees who are dropped for future matches after making high profile mistakes bringing cases of unfair dismissal.

For further information in relation to a person’s employment status please contact a member of the Employment team.

We publish blogs and social media posts to give a general overview of legal and commercial issues, relevant at the time of publication, which we hope you will find interesting. Please note that legal rules often change depending on the specific facts of a situation. The law also changes over time following changes in legislation or new court cases. We do not actively update our blogs or posts once they are published to reflect changes in the law.

As such, our blogs and posts are not intended to advise you on the law and must not be relied upon as legal advice. If you require advice on a particular issue then please contact us and we will be pleased to help.