UK Supreme Court says gig-working football refs likely to be employees for PAYE and NICs purposes

The Supreme Court has dismissed Professional Game Match Officials Limited's (PGMOL) appeal against HMRC relating to whether part-time football referees were its employees for tax purposes. 

The judgment given on 16 September will have widescale implications for the classification of tax status of any self-employed worker in the UK who has been treated as self-employed for tax purposes when providing their personal service, including many contractors, freelancers, and gig workers.

The decision underlines the fact that sufficient mutuality of obligation and control can be present even where a contract or gig is for a short period or specific purpose or both, without the hirer actively supervising or intervening while the work is on.  

Appeal back and forth

The case involved the question of whether part-time football referees, typically with other full-time jobs or occupations, who officiated at Champions League and FA Cup matches, were employed for tax purposes from the time they turned up at the ground for the match until delivering a match report on the following Monday.

HMRC raised an assessment against PGMOL in respect of 60 referees for £584,000 for tax years 2014/15 and 2015/16.

Various appeals went back and forth through the lower tribunals and courts culminating in the Supreme Court, with the final decision on 16 September concluding that the contracts possessed the necessary requirements to potentially be employments.

The two questions before the Supreme Court were whether there was sufficient mutuality between PGMOL and the referee during the match contract, and whether there was a sufficient framework of control, for the contracts to be employments. In both cases the Supreme Court found that there was.

The Supreme Court has now referred the case back to the First-tier Tribunal (Tax) (FTT) to decide whether the contracts between PGMOL and the referees were, in fact, contracts of employment.  If the FTT decides that they were – which may well be  likely – the tax assessment against PGMOL will stand.

Tax-status classification

This decision has a direct bearing on the classification of the tax status of individuals who are engaged on a self-employed basis. In the UK, this affects a large number of contingent workers, including self-employed freelancers, consultants and some "gig" platform workers.

It confirms that, in some situations, the bars are quite low for determining whether or not engagements contain sufficient mutuality of obligation and framework of control for there to be a possible "employment" for tax purposes. For example, mutuality can exist for a single gig or assignment – it is not necessary to show ongoing obligations between user and worker, before, after or between gigs or assignments. In the PGMOL case the court looked at whether there was mutuality of obligation and control during the period of the match contract.  It was not necessary to find that it was present between acceptance of the job and turning up for the match, or in the period after the match report was delivered.

The Supreme Court decision also confirms that it is not necessary for the user to have a contractual right or practical ability to intervene or control every aspect of a worker's performance.  In this case, it was sufficient that PGMOL was able to comment on a referee's performance and decisions after the match – the fact that PGMOL could not intervene during the match or in the writing of the match report did not prevent the SC finding that there was a sufficient framework of control.

Wide-ranging implications

There are broad implications for users and suppliers of contractors, self-employed consultants, sole traders freelancers and gig workers. The fact that there is no "on the job control" by an end user, supplier or platform will not necessarily mean that there is no control if the engagement involves or could involve some input from any of those parties. This will be especially the case if they can comment on how the work is or was done and suggest improvements or can subject the worker to some form of pseudo disciplinary measures.

It is possible that provision of some training or guidance – for example, "this is how you should decide if a handball is a penalty" before the match and "you should have sent him off" feedback after – could be enough to push an engagement towards "employment" rather than self-employment.  

Platforms and other suppliers, or users of occasional independent gig workers, will need to review how they tell gig workers what their particular gig involves and how they should do it.

There have been a number of claims in the Employment Tribunal by gig workers across different sectors claiming worker and/or employment rights. Even though this is a tax decision, it is based on employment case law and is likely to make it easier for such workers to show successfully that the jobs on which they provided their services were, in fact, employments entitling them to employment rights, such as statutory minimum notice, pension contributions, holiday pay and the National Minimum Wage.

IR35

Although this is not an IR35 case (because the referees were engaged directly by PGMOL, not via an intermediary such as a personal service company), the decision will have a bearing on IR35 status determinations and, therefore, to appeals of IR35 assessments under the off-payroll working legislation, which came into effect in the private sector in 2021.

HMRC can be expected to ramp up its enforcement of these 2021 rules and raise tax assessments within the next 12 months as the time limit for assessing the first tax year (2021/22) approaches. End users and suppliers should review their IR35 compliance processes and related contracts to ensure that, going forwards, status determination tools and checklists take this latest decision into account. 

The decision reconfirms that, for there to be an employment, the individual must provide their personal service – the existence of mutuality and control will not be sufficient to give rise to an employment without the crucial element of personal service.

There will, perhaps, be an increased reliance on the assertion that engagements do not involve or require personal service. However, this is not a reliable approach unless an engagement genuinely does not "normally" require performance by a particular person, or the person named in the engagement can send or use a substitute without needing the user's approval or consent, with the user genuinely not minding who turns up. In practice, such arrangements are rare in many types of working situation.

Statutory test of self-employment?

The wider picture is that this decision could help the UK government in its current plans to clarify who is and is not an employee as part of its promised review of the abolition of "worker" status and creation of a clear delineation between self-employed individuals and individuals who are employed. 

The Employment Rights Bill is due to be published in October 2024. However, Labour has indicated that the issue of single-worker status and the related definition of self-employment is one that will require extensive consultation and time, so we doubt it will be conclusively dealt with in the next bill.