Re-assessing the ingredients which determine employment status
Last month the Supreme Court ruled on the long-running dispute about the employment status of football referees. While the dispute is not over, we now have a clearer framework for it to be resolved.
Football referees might seem far removed from the normal employment context, but this ruling it is more about general principles than specifics. It is in effect a vote of confidence in long standing test which the courts have traditionally used to determine employment status, but with a modern twist.
Back in 1967 a High Court judge set out a three-stage test for determining employment status. Despite the archaic wording it is worth quoting directly:
“A contract of service exists if these three conditions are fulfilled. (i) 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. (ii) 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. (iii) The other provisions of the contract are consistent with its being a contract of service.”
In modern terminology, a contract of service becomes an employment contract, and master and servant become employer and employee respectively. The first element is now referred to as “mutuality of obligation” or, perhaps better the “work/wage bargain”. As can be seen from the extract both the first and second ingredients are necessary, but not sufficient, conditions for a contract of employment to be established.
The 1967 case involved an “owner driver” delivering ready mixed contract on a permanent basis. This case involved individual assignments to referee Championship matches, offered under an overarching agreement which did not itself amount to a contract of employment. The parties to this agreement were the individual referee and an umbrella body (Professional Game Match Officials Limited, controlled by the FA and associated bodies). The key issue was how to apply the mutuality of obligation and control tests in this relatively unusual context.
In essence, the Supreme Court said that the bar should not be set too high because the necessary fine tuning could be done at the third stage of the test (ie assessing whether the other provisions of the contract are consistent with a contract of employment).
For mutuality of obligation, it did not matter that an agreement to officiate a particular match could be cancelled by either side without penalty. And turning to control, it was sufficient if there was some degree of control – even if it was in relation to “incidental and collateral matters”. No one would expect the FA to be able to replace a referee at half time, anymore than the employer of a conductor would expect to control the tempo selected for a particular piece. But there were still other methods of control, such as penalising poor performance by pausing their selection for top-level matches.
The upshot was that the Supreme Court decided that there was a work/wage bargain and a sufficient degree of control for the evaluation to pass to the third stage of the ready mixed concrete test. This issue had been remitted to the First Tier Tribunal to decide. In that process the FTT will need to consider the totality of the picture, including the degree of control exercised by the employer, to decide whether that is consistent with a contract of employment.
This is a flexible take on the classic test, designed for a much more varied working landscape than was experienced in the 60s. There an element of circularity involved, particularly around control, but it encourages the courts to look at the picture in the round, and reduces the temptation to reach for ready-made answers based on previous case law.
That means it is hard to predict the FTT’s decision next time round. We won’t know for a while yet which side of the line this particular group of football referees fall. More generally, the continued emphasis on a flexible case by case analysis does not give either businesses or employees the certainty they would like when establishing the correct employment status. Our new Labour government has promised a review of the law in this area to see if it can be simplified, but the intricacies of this latest ruling show just how difficult that task will be.
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