Employment Status: Mutuality of Obligations & Control

This is a guest blog by Chartergate Audit Services

For employment businesses that engage self-employed subcontractors or limited company contractors either directly or via another intermediary, or that have encountered employment status issues, understanding the recent judgment from the Supreme Court (SC) in the matter of HMRC v Professional Game Match Officials Ltd (PGMOL) is a must.

The outcome of the SC’s judgment is that PGMOL’s appeal on the issues of mutuality of obligation (MOO) and control has been dismissed. The SC found that there was sufficient MOO and control present between PGMOL and the referees to merit consideration as to whether the referees were employed by PGMOL based on all the relevant circumstances The SC has now remitted the matter back to the First Tier Tribunal (FTT) to make this determination.

What are the key takeaways from the SC’s findings in this case, and why is it so important?

1. The SC made considerable findings on the issue of MOO. It essentially split MOO into two levels.  The first is the MOO necessary to bring a contract within the employment sphere.  The second is the MOO sufficient for the contract to be one of employment.  The necessary level of MOO is determined at stage one of the Ready Mixed Concrete (RMC) case.  The sufficient level of MOO is determined at the third stage of the RMC test when a tribunal considers all the relevant terms of the contract between the parties with a view to assessing whether it is contract of employment or a contract  for services.
2. On the issue of control, the SC reiterated some important points.  The level of control required for a matter to proceed to stage three of the RMC test is for tribunals to find a sufficient framework of control.  In PGMOL the SC found the fact that PGMOL could not intervene during the matchday activities did not prevent the sufficient framework of control existing.

This judgment represents a significant step in the development of case law on employment status.  The judgment however,  stops short of  providing findings as to what factors will be relevant to finding the sufficient level of MOO at stage three of the RMC test. The judgment also fails to  provide guidance on how this judgment will affect the status of agency workers. For further details on this judgment and related topics  , please contact our  audit team who  are available for consultations, webinars, seminars or question & answer sessions on the judgment.  Please contact marktaylor@chartergates.com or zubairahmed@chartergates.com on how to book time with an audit team member.