Employment Status

Thursday 18th June 2020

Employment status continues to be a key issue in many businesses and will continue to be so specifically in relation to the changes which are due to come into force next year regarding IR35. This is evidenced by a recent decision whereby certain part-time football referees were held not to be employed by Professional Game Match Officials Ltd (PGMOL) and so income tax and national insurance contributions were not payable (in the case of Revenue and Customs v Professional Game Match Officials Ltd (PGMOL)).

In that case, the referees officiated, predominantly, at football matches in League One and League Two. PGMOL argued that unlike in the Premier League, those referees in the lower divisions, were not directly employed.

When determining whether an individual is directly employed and therefore an employee, Tribunals typically look at whether there is the following:

#Mutuality of obligations – between the individual and the company (i.e. is the company obliged to offer work and is the individual obliged to accept it?);
#Control – does the company have a sufficient degree of control over the individual (i.e. what degree of control does the company have over what, how, when and where the individual completes the work?);
#Substitution – is there a right of substitution (i.e. is personal service by the individual required or can the individual send a substitute in their place?); and
#Other terms – other terms not inconsistent with a contract of employment.

In that case, the Tribunal concentrated on the test of #Mutuality of obligations:

#Mutuality of obligations – the Tribunal held that engagements could be cancelled by PGMOL and referees could fail to attend a match without PGMOL declaring that they would be in breach of contract. Therefore, there was no mutuality of obligation.

On the basis that the Tribunal found that there was a lack of #Mutuality of obligations and therefore there was no employment status, the argument of whether there was #Control was not explored further. It was however noted that in relation to #Control that the referees could withdraw from a match at any point and referees often supplied their own equipment and had full responsibility for managing their own fitness and pre-match preparation.

#Next steps

In light of the recent changes which are due to come into force in relation to IR35 (which were meant to come into force earlier this year but have been delayed until next year), businesses should: (a) undertake a comprehensive risk assessment to establish their exposure to IR35 and what changes need to be made; (b) negotiate, if applicable, new arrangements with current contractors (and staffing agencies); and (c) ensure they have the necessary protection in place in relation to new arrangements.

Further information in relation to the changes due to come into force in relation to IR35 can be found in our updates – centrefield.law/news/private-sector-know-your-obligations-in-relation-to-ir35 and centrefield.law/news/extension-of-ir35-is-postponed.

If you would like more information on any of the points raised above or any advice in connection with the same, please contact Helen Littlewood (Senior Associate) –HelenLittlewood@centrefield.law – or call 0161 672 5450.

Please note the information contained in this briefing is intended as a general review of the subject featured and is not intended as specific legal advice.