PGMOL ties up Mutuality but Control’s new low bar is a concern set to run and run

It’s been a few weeks since the Supreme Court handed down its verdict on the case of Professional Game Match Officials Ltd (PGMOL), and there have been some helpful explainers of the case since.

Rather than explore the minutia or the what-ifs, I’d like to look at the two classic IR35 status factors at the heart of the case, Mutuality and Control, writes Angela Ferguson, head of employment taxes at PSTAX.

PGMOL, the non-IR35 case with IR35 impacts

PGMOL was an employment status case rather than an IR35/Intermediaries legislation case.

The result of June’s 2023 hearing at the Supreme Court (published on September 16th 2024) was another referral to the FTT for a final decision to be made.

However, the Supreme Court did find that there was sufficient control and mutuality of obligations. As this is the UK’s highest court, the judgment on mutuality of obligations was the main focus of PGMOL.

Mutuality of Obligations (MoO)

Mutuality is a keystone of the Ready Mixed Concrete (South East) Ltd tax case. For there to be the existence of a contract of employment, both mutuality of obligations and a sufficient degree of control must be present.

The court confirmed that there is a distinction between overriding or umbrella contracts (which govern continuous employment) and individual contracts (which govern single engagements).

For overriding/umbrella contracts, weight was attached to the need for the continuing existence of mutual obligations to perform work, when required, and to pay for such work -- and that this is in place during the entire period said to be covered by the overriding contract.

When sufficient mutuality applies…

By contrast, individual contracts could exist if sufficient mutuality of obligations existed only during the period when the employee is working for the employer.

The Supreme Court judges held that the right to cancel the engagement, even without penalty was not relevant, as MoO applied from the time the contract was accepted, in this case, in the week leading up to the match, and that this satisfied the test of Mutuality.

This PGMOL judgement by the Supreme Court is the final word on Mutuality of Obligation and therefore, it is difficult to see how Mutuality will not be a relevant factor when there is an obligation on the employee to personally perform duties in return for payment by the employer.

Control

The judgment confirmed that earlier authorities on the definition of control apply, namely that:

“Control includes the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when and the place where it shall be done.”

And:

 “What matters is lawful authority to command so far as there is scope for it.”

In this, the judgement confirmed that not being able to intervene directly during the match, misunderstood the degree of control required.

A legal right of control which provided a sufficient framework of control was central. However, this did not need to be in respect of every aspect of the performance.

It was decided that PGMOL’s pre-season documents, the referees being subject to FA rules while at a match, along with the right to penalise referees for breaches by denying them opportunities to officiate at future matches, constituted effective control measures to a sufficient degree.

PGMOL implications, including Control's new low bar

Although it will be disappointing for the PGMOL organisation that this case has been remitted back to the FTT, the Supreme Court’s ruling affirms that Mutuality of Obligations will usually be present where the employer pays for the worker’s services.

Whether there is a sufficient degree of control in your own engagements will be dependent on the facts, but where there is a legal right to control, as opposed to an ability to practically control in the moment, the control test would now seem to be set at a low bar.

This will lead to the first two stages of the employment status tests being more easily satisfied in more cases.

As a result, greater emphasis on the degree of control in the third and final stage of the test, along with the other factors to weigh up, will be all the more important in future status cases.

Finally, beware of OPW effects, including on SDS

And there might be ramifications for those affected by the Off-Payroll Working (OPW) rules. When completing Status Determination Statements, for example, engagers in the wake of ‘PGMOL SC’ will want to consider gathering evidence of the factual matrix.

This factual matrix gives context to when the contract was entered into, which will cover the facts and circumstances about what exactly was known to both parties including the length of the relationship, the custom in the industry, and the fact that the person providing the work has an established business as an independent contractor.