Case update
Employment status for part-time individuals
Recent case involving football referees
In a significant recent case involving the employment status (for tax purposes) of certain part-time football referees, it was found by the First-tier (Tax) Tribunal (FTT) that those referees were not employees of Professional Game Match Officials Limited (PGMOL) but rather engaged as self-employed contractors. We summarise practical takeaways for employers below.
Background
The case concerned the employment status of a group of part-time football referees engaged by PGMOL, the body responsible for supplying match officials to professional football competitions in England. The dispute focused on referees within PGMOL’s “National Group”, who typically officiated matches on a part-time basis alongside full-time employment elsewhere.
The key issue was whether these referees could be rightfully considered employees of PGMOL, such that payments made by PGMOL to the referees constituted earnings from employment and therefore should have had income tax and national insurance applied to it.
This case is the culmination of long-running litigation between HMRC and PGMOL. Having started in 2018 in the FTT, it eventually went all the way to Supreme Court in 2024, which then remitted the case back to the FTT – see below for a timeline.
August 2018
Original FTT decision that individual match appointments did not amount to contracts of employment because there was insufficient mutuality of obligation and insufficient control during the engagements.
May 2020
Upper Tribunal decision upholding the FTT’s decision on mutuality of obligation but found that the FTT had been incorrect on the issue of control (however, the conclusion on mutuality of obligation was sufficient to decide that the relevant contracts were not contracts of employment).
September 2021
Court of Appeal decision overturning the previous decisions.
September 2024
Supreme Court decision upholding the Court of Appeal decision. On mutuality, the Supreme Court held that it always exists where payment is provided in return for personal service, even if the obligations only exist during the time when the individual is working for the engager and not in the periods in between. On control, PGMOL was found to have a sufficient degree of control because e.g. if a referee breached their contractual obligations, sanctions could be imposed by PGMOL. Having clarified the position on mutuality and control and the legal test for employment status, the Supreme Court then remitted the case back to the FTT to consider in the context of all relevant terms of the contract and the surrounding circumstances.
May 2026
FTT decision (considered below).
Types of employment status
For employment law purposes, there are three categories for employment status:
1. Employee.
2. Worker.
3. Self-employed independent contractor.
From a tax law perspective, there are only two categories for employment status: (i) employee; and (ii) self-employed independent contractor.
Why is employment status important?
Two reasons:
1. Tax: this was the driver behind this case and can mean significant sums are owed by an organisation if an individual is reclassified as an employee.
2. Employment protections: different protections are afforded to individuals based on which employment status category they fall into i.e. there are more protections for employees than there are for workers, and more protections for workers than there are for self-employed individuals.
The test for employment status
Both the Supreme Court judgment in this case and the most recent FTT judgment focused on the test for employment status as set out in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 which provided that, to determine whether there was an employment relationship that exists, the following should be examined:
- Mutuality of obligation: Is there an obligation (i) on the company to pay a wage (ii) in return for personal service by the individual?
- Control: How much control does the company have over how the individual performs the services/duties? Can the company direct how the work is done or is it highly skilled/specialised?
- Other factors: Are the other provisions of the contract consistent with it being a contract for employment (and taking into account all the surrounding circumstances)?
This RMC test has been revisited and refined by lots of case law since, most notably in providing that personal service (i.e. that there is no, or a limited, right of substitution and that the individual must be required to perform the work personally) has become a factor in itself alongside mutuality of obligation and control.
“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 PGMOL a framework of control sufficient for the purposes of meeting the control test for employment purposes. […] the right to impose […] sanctions played a significant part in enabling PGMOL to exercise control over the referees in the performance of their duties, on and off the pitch”
Para. 88 of the Supreme Court decision
Why did the FTT decide the referees were not employees?
Of the three elements of the employment status test as set out in RMC, the Supreme Court had already decided the position on two of the elements in the RMC test (mutuality of obligation and control).
The FTT’s decision is therefore key in shedding light on the third element of the RMC test and its importance in determining whether an employment relationship exists – i.e. even if mutuality of obligation and control are present, can it be said that looking at the circumstances as a whole, the relationship between PGMOL and the referees were truly an employment relationship (for tax purposes)?
Mutuality of obligation
As noted above, the Supreme Court had already decided that this element of the test was satisfied in the case of the referees (see quote on the right).
The FTT emphasised, however, that the “obligations assumed were narrow, time-limited and permeated by choice. They did not bind the parties into an ongoing or stable relationship of mutual commitment nor did they generate any expectation of continued performance beyond each engagement” (para. 291).
Control
Likewise, the Supreme Court had already decided that this element was satisfied in this case (see quote on the left).
Accepting the Supreme Court’s conclusion on control, the FTT added that “the control exercised by PGMOL, though sufficient to meet the irreducible minimum, was regulatory, developmental and gatekeeping in character rather than managerial and supervisory. It does not support a conclusion that the individual match engagements were contracts of employment” (para. 299).
Other factors/wider picture
The FTT noted that its approach to determining employment status was not one of “applying a mechanistic checklist” but rather a process of identifying relevant facts and “then standing back to form an overall judgment”.
Relevant facts included those summarised below, but taking a step back and looking at the full picture collectively, the FTT concluded that “what emerges instead is the picture of skilled professionals participating voluntarily in a regulated framework, undertaking discrete engagements for remuneration while retaining substantial autonomy and independence”. The referees were therefore not employees, but rather self-employed contractors.
“it is clear that the individual engagements of referees to officiate at matches satisfied the test of mutuality of obligation, which is a necessary but not sufficient condition to the existence of a contract of employment”
Para. 57 of the Supreme Court decision
Practical takeaways
- While this case is specifically a tax case, it reminds us that the whole arrangement needs to be examined to determine whether a true employment relationship exists for employment status purposes. Mutuality of obligation and control are key to finding an employment relationship, but those two elements alone are not necessarily sufficient.
- Use HMRC’s Check Employment Status for Tax (CEST) tool with caution: HMRC’s CEST online tool is designed to assess whether a contractor would be an employee for tax purposes. Employers may continue to use the tool, but it should be treated only as a starting point (and indeed may not produce a result either way), even more so since this recent case dealing with the employment status of referees highlights that the wider context of the arrangement can be decisive.
- Rather, carry out a structured analysis of all the potentially relevant factors, as PGMOL did in this case. The Northridge Employment team has significant experience of conducting employment status reviews of contractors and other temporary/part-time roles. Get in touch with Employment Partner Jamie Feldman to find out more.
“There is no ‘prima facie’ conclusion of employment where there has been a finding of the irreducible minimum requirement of mutuality (payment for personal services performed) and control (a sufficient framework of control).”
Para. 26 of the recent FTT decision
Disclaimer
This update should not be treated as legal advice and only provides general information on the issues discussed.
