Drawing on his insights as an amateur football referee and tax lecturer, Mike Thexton assesses both sides of the argument in this employment status case.
The question of whether someone is an employee seems to become ever more complicated. HMRC may assess an alleged employer for tax and NIC deductions when they thought they were correctly making gross payments to a self-employed person, and cases about plumbers and cab drivers have highlighted the rights of different classes of ‘worker’ in the gig economy.
The latest FTT decision concerning football referees provides an interesting slant on this intractable problem. It’s a fascinating read for a (very junior) football referee such as myself, and also for anyone who is interested in this area of law. It describes the principles on which the decision depends – old precedents and some new ones – and applies them to a complex set of facts, before coming to a decision (the referees were right – of course!) for an interesting reason.
Professional Game Match Officials Ltd (PGMOL) is a joint venture between the English Premier League, the Football Association and the English Football League (the competitions). It organises the referees who officiate in their competitions. The elite ‘select group’, who usually appear on Match of the Day, are employees of PGMOL; but there is a second-tier ‘national group’ of about 60 officials who have been treated as self-employed.
HMRC issued regulation 80 determinations for income tax and NICs for 2014/15 and 2015/16 totalling £583,874, arguing that PGMOL should have operated PAYE in respect of the national group of referees.
It is not surprising that HMRC reckoned the national group referees were employees. They signed an agreement with PGMOL at the beginning of each season, and were subject to a number of detailed requirements on fitness, assessment, and compliance with match day procedures. They are provided with match and training kit, and suits for wearing to and from matches. However, even elite referees must supply their own boots, watches, cards and whistles. These are hardly enough to be the trappings of a business – most employees buy their own footwear.
The leading authority for employment status disputes remains Ready Mixed Concrete (1968), in which the triple-headed test of an employment contract is set out: mutuality of obligations, control by the employer, and consistency of the other provisions of the contract with it being a contract of service. In this case Judge Falk also reviews other approaches, including consideration of whether the person is ‘in business on his own account’ or is ‘part and parcel of the organisation’.
PGMOL’s counsel contended that there was no contractual relationship between PGMOL and the referees at all – it merely organised the appointments of referees, who worked for the competitions. The judge rejected this as unsupported by the evidence.
However, it was still necessary to determine whether there was a contract of service. In fact, there were separate contracts – an overarching agreement for the season, under which appointments were made for individual matches. The payments were made for matches, and HMRC argued that the context of a continuing relationship was relevant in inferring mutuality of obligations. In short, there was an expectation that matches would be offered and the referees would accept them.
Did mutuality exit?
The tribunal did not consider that was enough for mutuality of obligation to exist. Even after a match had been offered and accepted, it was possible for the referee to withdraw, or for PGMOL to cancel the appointment. This contrasted with the situation in Weight Watchers (2012), in which leaders could only opt out of meetings for good reasons and had to try to find their own replacements – their obligation to work only ceased when a substitute had been found. If a referee withdraws from a match, PGMOL fills the gap.
Most significant, though, appears to be the lack of ‘control’. The requirements imposed on the referee by the rules of the competition and the laws of the game, and the relentless assessment and evaluation that elite referees undergo, appear at first glance to constitute something like the control that a ‘master’ exercises over a ‘servant’. However, once the match begins, PGMOL have no say at all in how the referees carry out their task.
The judge cites the precedent of Sharpe v Bishop of Worcester (2015): a clergyman was held not to be employed (in a case about unfair dismissal) because he could not be told how to perform his duties. The facts predate the introduction of the Video Assistant Referee, of course, but even VAR only advises the referee to think again. The laws of the game make it clear that the referee is in control. On that basis, the contracts were not contracts of employment, and PGMOL was not liable for the deductions.
Men in black
I was surprised to find such a comparison between a clergyman (my father) and a referee (myself) in the context of a tax case. I suppose we both dress up in black on a Sunday and seek to regulate the behaviour of people in accordance with the laws of a higher authority. He rarely had to put up with shouts of ‘you don’t know what you’re doing’ – and the words of the songs sung by the ‘congregation’ tended to be a little different.
Lady Arden in the Sharpe case commented that she could not think of any other professional person who had the same independence of action as a clergyman; perhaps she does not watch football.
I doubt whether the precise terms of this FTT decision will apply widely. However, the relationship between the overarching agreement and the individual appointments is something that does have a wider application – it is useful to see the judge’s analysis that one does not determine the status of the other.
About Michael Thexton
Mike Thexton has been talking and writing about tax for over 30 years, as well as running a small practice and giving consultancy advice on VAT. In his spare time he referees children's football and writes books - What happened to the hippy man? about the 1986 hijacking of PA 073 in Karachi (www.hippyman.com), and the Xessus series of fantasy novels (www.xessus.com). Mike is a member of Council of the Chartered Institute of Taxation.