Background:

This case involved referees who officiated football matches. They were engaged by the appellant at the start of each season.  The revenue considered that the appellant was liable to deduct income tax and national insurance from the payments made to referees. The issue was the status of the referees relating to their contract.

The contract struck was one which was season-long and overarching.   It included terms regulating the relationship but placed no requirement on the appellant to offer games and no obligation on the referee to accept them.

Outcome:

The Tribunal, at first instance, rejected the argument from HMRC that the overarching contracts constituted contracts of employment.  They found that there was no mutuality of obligation on referees as they did not have to accept the matches.  On the individual contracts when a match was accepted the Tribunal also found that there was no contract of employment because there was no sanction should the referee fail to attend but they would not be paid.  In that sense there were no mutual obligations.

HMRC appealed this to the Upper Tribunal which was rejected and then onto the Court of Appeal.  The Court of Appeal allowed the appeal citing that there was mutuality of obligation in relation to the individual contracts struck but agreed with the Tribunal that there was no contract of employment arising from the overarching agreement at the beginning of the season. This led to the PGMOL appealing to the Supreme Court.

The Supreme Court held that there was a tendency to focus too greatly on mutuality of obligation and control.  They held that it was proper to look at the cumulative effect of the whole contract and the surrounding circumstances.   There was a need to have flexibility in the approach to control, especially bearing in mind how employment practices had evolved.  On mutuality of obligations, the Supreme Court looked at the individual contracts citing that all that was required was the mutuality when the putative employee was working for the putative employer. Accordingly, this would arise when the official arrived at the ground to the submission of their match report following the game. The right to cancel the agreement without penalty did not mean there were no mutual obligations to each other.  On control, the Supreme Court found that whilst the PGMOL could not control the actions of the referee during their duties they did have a framework in place in terms of the accepted duties and leading into the submission of a match report. This led to sufficient control for the purposes of there being employment.

Practical Guidance for Employers:

This case provides a useful examination as to whether there was a contract of employment in a rather novel situation. An important learning point is that the right to cancel without penalty (pardon the pun) does not remove the mutuality of obligations. The court will necessarily look beyond that as to the extent to which there is such mutuality when the obligations have begun to be carried out. Whilst the referees were winning this one at half-time through the Tribunal process the Supreme Court has blown the final whistle finding that there was sufficient mutuality of obligation and control.

https://www.supremecourt.uk/cases/uksc-2021-0220.html