Dispute between HMRC and part-time football referee provider over employment status remitted to First-tier Tribunal

About this case:

• Citation:
  [2024] UKSC 29
• Judgment:
  External link
• Court:
  UK Supreme Court
• Judge:
  Lord Richards

The dispute between Professional Game Match Officials Ltd and HMRC concerned the employment status of part-time referees and how match fees paid to them should be treated for income tax and National Insurance purposes for tax years 2014-15 and 2015-16. HMRC had appealed the FTT’s decision partly based on a contention that there was sufficient mutuality of obligations and control for part-time referees to be considered employees of the appellant.

The appeal was heard by Lord Hodge, Lord Leggatt, Lord Stephens, Lady Rose, and Lord Richards. Jonathan Peacock KC, Georgia Hicks, and Harry Sheehan appeared for the appellant and Akash Nawbatt KC and Sebastian Purnell for the respondent.

Open to refuse

The appellant provided the majority of football officials at Level 1 in the FA’s nine-level classification of match officials. Level 1 officials comprised both a group of full-time referees employed under written contracts of employment, the Select Group, and a second group, the National Group, comprising persons who referee in their spare time and usually have some other full-time occupation and who primarily officiated matches in the Championship League of English football and the FA Cup.

Match appointments were offered to National Group members using a software system that typically assigned a weekend’s match on the preceding Monday. It was open for a referee to refuse the appointment, but the appellant would typically want to know the reason for refusal. The FTT found that when a referee accepted a match appointment a contract was formed under which the referee agreed to officiate the match in question in exchange for the appropriate fee. The overall issue of the case concerned whether these contracts constituted contracts of employment, as contended for by HMRC.

It was found by the FTT that these contracts had insufficient mutuality of obligations between PGMOL and the referees to constitute contracts of employment, and also that PGMOL had insufficient control over the referees under the contract. On appeal by HMRC, the Upper Tribunal held that the FTT had misapplied the law on control but dismissed the appeal nonetheless on the basis that there was insufficient mutuality of obligation. The Court of Appeal allowed HMRC’s appeal on this point and remitted the case to the FTT to reconsider the two issues.

For the appellant it was submitted that mutuality of obligation involved more than payment in exchange for personal work and had to exist for at least some time before the employee provided the service for which they were to be paid. Additionally, the UT and the Court of Appeal had wrongly interfered with the decision of the FTT on the question of control.

Framework of control

In an opinion with which the other judges agreed, Lord Richards said of the appellant’s arguments on mutuality: “None of [the] authorities establishes that, where there is a single engagement (such as officiating at a particular match), there must be mutual obligations in existence before the engagement commences, for example before the referee arrives at the ground on the day of the match. On the contrary, there are authorities that establish the contrary.”

He continued: “It does not follow from the right of either party to cancel the engagement without penalty that, while the contract remained in being, the parties were not under mutual obligations to each other. On the contrary, those mutual obligations existed from the time of acceptance of the match, unless the engagement was terminated.”

On the issue of control, Lord Richards said: “In my view, the Court of Appeal was correct to say 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 PGMOL a framework of control sufficient for the purposes of meeting the control test for employment purposes.”

He explained further: “I consider that the existence of effective sanctions which it was open to PGMOL to impose after the end of an engagement are of some significance because, on the facts of this case, the right to impose those 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. I am not downplaying the significance of the fact that the referees’ obligations were contractual and enforceable as such, but I think the UT was right in this case to attach some significance to those sanctions.”

Lord Richards concluded on disposal: “Having reached its conclusion that there was insufficient mutuality of obligation and control, the FTT did not express any view as to what the position would otherwise be, other than pointing to some features that ‘may be suggestive of an employment relationship’.  In those circumstances, the right course is to remit the case to the FTT for its decision, on the basis of its original findings of fact and applying the guidance as to the correct approach to the issue.”