Employed or Contractor

The recent case of Commissioners for Her Majesty’s Revenue and Customs v. Professional Game Match Officials Ltd. (2024) had significant implications for employment contracts, particularly in the context of distinguishing between employment and self-employment.

Facts:

Football referees are generally only part-time and the employer Professional Game Match Officials Ltd considered them as independent contractors. However, HMRC argued that they were employees and as such subject to PAYE and national insurance. The Supreme Court’s decision was therefore that the contracts DID contain mutual obligations and a degree of control making them capable of being employment contracts. They said “The days when the vast majority of the workforce attended at a particular factory, shop or office between set hours to work in highly prescriptive roles have long gone...”

Here are some of the key impacts for employers:

1. Clarification of Employment Status: The case reinforced the importance of clearly defining the nature of the working relationship in contracts. It highlighted the need for organisations to accurately assess whether individuals are employees or independent contractors based on the degree of control, mutuality of obligation, and other factors.

2. Tax Implications: The ruling emphasised the tax obligations that arise from the classification of workers. Organisations must be diligent in their assessment to avoid potential liabilities for unpaid taxes and National Insurance contributions if workers are misclassified.

3. Precedent for Future Cases: The decision served as a precedent for similar cases involving self-employment versus employment status, influencing how courts interpret such arrangements in the future.

4. Impact on Contract Language: Organisations may need to review and possibly revise their contract language to ensure it accurately reflects the nature of the relationship, incorporating specific terms that align with either employment or self-employment criteria.

5. Policy Considerations: The case may prompt organisations to adopt more robust policies and practices regarding worker classification, ensuring compliance with tax laws and reducing the risk of disputes.

6. Focus on Rights and Benefits: It highlighted the importance of considering the rights and benefits associated with employment, pushing organisations to weigh these factors carefully when structuring contracts.

Overall, the case underscored the need for clarity and compliance in employment contracts, influencing how organisations engage with workers in various roles, especially in sectors with similar dynamics.

Talk to Kmarc if you are having difficulty with this issue or any other comparative issue.

This is a very difficult issue for organisations to get to grips with.

At Kmarc.co.uk we can offer help and advice.

email jacqui@kmarc.co.uk or phone 0734 123 5848