R & C Commissioners v Professional Game Match Officials Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 06 May 2020 |
| Neutral Citation | [2019] UKUT 51 (TCC) |
| Date | 06 May 2020 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2019] UKUT 51 (TCC)
Upper Tribunal Tax and Chancery Chamber
Mr Justice Zacaroli, Judge Thomas Scott
Akash Nawbatt QC and Sebastian Purnell, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the appellants
Jonathan Peacock QC and Georgia Hicks, instructed by McCormicks Solicitors, appeared for the respondent
Whether Level 1 National Group referees are employees of POGMOL – Whether FTT erred in concluding that insufficient mutuality of obligations existed in overarching contracts and individual match contracts – No – Whether FTT erred in concluding that insufficient control existed under individual match contracts – No – Appeal dismissed.
The Upper Tribunal dismissed an appeal by HMRC against the decision of the FTT which had concluded there was insufficient mutuality of obligations or control for a contract of employment to exist in either the overarching contract or in individual match contracts between POGMOL and Level 1 National Group referees.
Professional Game Match Officials Limited (POGMOL) engaged football referees to officiate at matches in some capacity throughout the Premier League, Championship, Leagues 1 and 2 and the FA Cup. Officials engaged to referee at Premiership level were under full-time contracts of service (employed), but at all lower levels (referred to as the “National Group”) the duties were typically performed by individuals in their spare time alongside other employment and were treated by POGMOL as being under contracts for service (self-employed).
HMRC argued that the National Group contracts were also effectively contracts of employment and thus both PAYE and Class 1 National Insurance contributions should have been applied. Accordingly HMRC raised determinations and assessments in respect of the 2014–15 and 2015–16 tax years and POGMOL appealed to the FTT against these.
There were two types of contract under scrutiny: an overarching annual contract between POGMOL and each of the referees, and a series of separate contracts in respect of each individual match for which a referee was engaged.
The FTT found that there was insufficient mutuality of obligations in respect of the overarching contract for an employment relationship to exist. Furthermore, that in respect of the individual match contracts, there was insufficient mutuality and insufficient control for employment to exist. HMRC appealed against each of those conclusions.
It was common ground that the essential tests remain those laid down in the case of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [2010] BTC 49:
A contract of service exists if these three conditions are fulfilled.
- The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.
- He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master.
- The other provisions of the contract are consistent with its being a contract of service.
The majority of discussion centred around the first of these tests, referred to as the “mutuality of obligations” (MOO) test, which has been highly contentious for some years.
HMRC contended (as it has frequently done before) that the issue of MOO serves only to determine whether a contract of any sort exists, and if there is a contract, that it requires personal service and is in some way work-related – but that the test itself is not indicative of employment.
The UT rejected this argument, citing Cotswold Developments Construction Ltd v Williams [2006] IRLR 181, in which Langstaff J conceded that whilst “mutual obligations are necessary for there to be a contract at all” he went on to clarify that “regard must be had to the nature of the obligations mutually entered into to determine whether a contract formed by the exchange of those obligations is one of employment, or should be categorised differently.”
This view was reinforced by Mummery LJ in James v Greenwich LBC [2007] ICR 577 (EAT), stating that “the mutuality point is important in deciding whether a contract, which has been concluded between the parties, is a contract of employment or some other contract.”
Finally, the UT drew upon Weight Watchers (UK) Ltd v HMRC [2012] EWCA Civ 1155 in which Briggs J noted that MOO has a dual purpose. Firstly, that it will determine whether a contract exists, but secondly, that it can determine whether that contract is one of employment.
HMRC contended that the MOO test is satisfied wherever an individual provides his personal service and the employer pays him for work done. POGMOL on the other hand, contended that for MOO to be present, the employer must be obliged to offer work (or payment in lieu of work) and that the individual must be under an obligation to accept work and carry it out personally.
The UT deliberated at length upon the qualities of mutuality and from the considerable authorities available, derived three propositions necessary for a contract of employment:
- In respect of the employee, that there is a minimum obligation to perform at least some work and to do so personally. The UT made clear that it would not be inconsistent that an employee may in some circumstances refuse work without breaching the contract, but that it would be inconsistent with the test if the individual was able to decide, without breaching the contract, never to turn up for work.
- In respect of the employer, that there is an obligation to provide at least some work or alternatively to provide some form of consideration in the absence of such work. It would therefore be inconsistent with an employment contract if the employer (as contended by HMRC) was only obliged to pay for work actually performed. That would be a unilateral contract (one created by an offer which can only be accepted by performance) but without the necessary mutuality to constitute an employment contract.
- That both these obligations must subsist throughout the whole period of the contract
The overarching contract consisted in a variety of written terms within a group of documents, generally comprising a Code of Practice, Fitness Protocol, Declaration of Interests, Match Day Procedures and a Code of Conduct.
On receiving a signed Code of Practice, PGMOL agreed to hold the referee on its list for the football season and to provide a training programme, continual assessment, match kit, health insurance and access to sports scientists but crucially, no guarantee of any work. In return, the referees agreed to act impartially and in accordance with the relevant codes and procedures, not to enter into sponsorship or promotion arrangements or undertake media engagements without prior agreement, but did not commit to performing any work.
POGMOL had argued to the FTT that these terms amounted to “expectations” rather than legal obligations and that there was no contract at all. This argument had been rejected by the FTT but it was nevertheless upheld and confirmed by the UT that the annual overarching contracts lacked any legal obligation on POGMOL to provide any work or on the referee to accept work if offered.
Consequently, applying the three principles it had earlier set out, the UT agreed with the FTT and determined that there was insufficient MOO for an employment contract to exist.
The individual match contracts were typically offered by POGMOL on the Monday preceding the match and referees effectively registered their acceptance via an online administration system. This contract therefore commenced from the point of acceptance.
Having accepted an appointment, the referee was still able to withdraw and similarly POGMOL could revoke the appointment at any point before the scheduled match. There was no sanction if a referee withdrew and no redress for the referee if POGMOL revoked the application.
In view of the circumstances the FTT had found that there was some mutuality during the actual engagement, i.e. the match officiation, but that mutuality did not subsist throughout the entire period of the contract (which had commenced some days earlier) and therefore there was insufficient MOO to form an employment relationship.
Again, applying in particular the third of its own three principles, the UT agreed with the FTT and upheld its decision that there was insufficient MOO to indicate a contract of employment.
Having upheld the first two elements of the FTT decision, it was established that the appeal would in any event fail. If there was insufficient MOO to constitute an employment relationship in either the overarching contract or the individual match contracts, it was therefore not necessary for the UT to consider the arguments in respect of control. However the UT chose to do so anyway, but found that POGMOL did not have sufficient control to indicate an employment relationship.
Whilst match officials are subject to a Code of Conduct and certain other elements of control, they are skilled persons over whose performance there is little scope for control during the performance of the match. The UT considered that although there might be scope for control in a contract which consisted of a number of engagements, where there would be the ability to step-in and impose a sanction between matches but still during the period of the contract, the POGMOL contracts in question were single match engagements, and so there was an absence of ability to “step-in” or impose any sanction until after the match had ended, thus after the contract had ended. There was little or no control during the period of the contract itself.
Accordingly, the UT upheld the decision of the FTT and the appeal was dismissed.
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