Background to worker status

A number of cases have looked at worker status in recent years, focused mostly around the 'gig economy' with claims against companies including Uber and Deliveroo.

The gig economy typically involves individuals working in temporary positions in the service industry, such as food delivery or private couriering. The sharp increase in the number of people working in this sector has led to a huge shift in the cultural and business environment.

The Good Work: Taylor Review of Modern Working Practices, published in July 2017, looked at the growing gig economy and considered the implications on worker rights and responsibilities, as well as on employer freedoms and obligations. This review led to the Good Work Plan, published by the UK Government in December 2018, which made a number of proposals designed to improve working conditions for those working in the gig economy and subject to uncertain employment rights.

Despite the widespread attention that this has received in the media and case law, we still do not have much clarity on worker status and whether individuals working in less traditional roles are entitled to worker or employee protections.

Are athletes workers?

Last year, the issue of employment status was brought to the attention of sports governing bodies when Jess Varnish raised a claim against British Cycling and UK Sport for unfair dismissal, sex discrimination, victimisation and unlawful detriment for making a protected disclosure after failing to qualify for the 2016 Rio Olympics and allegedly being told to "go and have a baby".

In order to hear the claims, the employment tribunal first had to determine whether Varnish was an employee or a worker of British Cycling or UK Sport. Varnish alleged that the high level of control the cycling governing body and UK Sport held over her indicated that there was an employment relationship. The relevant status (worker or employee) was important to this case because it dictates the rights that an individual is entitled to. Workers are protected against unlawful discrimination, victimisation and unlawful detriment for making a protected disclosure, but only employees are protected against unfair dismissal.

What is the difference between a worker and an employee?

There are different definitions of 'employee' across UK legislation. The Employment Rights Act 1996 defines an employee as "an individual who has entered into or works under a contract of employment", which is defined as "a contract of service or apprenticeship, whether express or implied, and whether oral or in writing"

A contract of service is not defined, and is left to be decided by the courts and employment tribunal. Over time, the courts have developed tests for determining whether an individual is an employee.

Since the late 1960s, the courts have identified certain conditions that need to be fulfilled to satisfy the employment status test. The first of these is mutuality of obligations (i.e. an agreement by the employer to provide work and an agreement by the employee to undertake work). Second is the question of control (in terms of how and when the services are provided). Finally, there is the issue of whether the other provisions of the contract are consistent with employment, such as holiday pay or sick leave.

The definition of a worker is also found in a number of pieces of legislation. It gives rise to fewer protections and, while broadly similar to the definition of employee, it is generally thought to represent a more distant connection (for example, the level of control necessary to establish worker status will be lower as compared to employment status). Key themes from recent, high profile cases such as Uber and Deliveroo have involved interrogation of the true nature of the agreement, whether there is a mutuality of obligation and whether the individual undertakes personally to work or perform services for another party, when that party is not a direct client or customer of the worker.

Despite a long line of case law examining worker status, the boundary between 'employee' and 'worker' is still unclear and we do not yet have clarity on the matter. Whilst there seems to be a trend toward greater protection, and a push for this to be reflected in legislation, we have started to see some organisations take matters into their own hands.

Recently, the GMB Union, which represents workers across industrial sectors, retail, distribution, schools and security, announced that it had reached a settlement in ongoing litigation with parcel delivery company Hermes. The terms of the agreement provide that Hermes couriers can now opt to become 'self-employed plus'. Those who opt for this status will be paid less than if they were wholly self-employed, but they will be entitled to a number of benefits, including holiday pay. This status does not have formal legal recognition, and the tax position has not yet been tested, but it is an example of how this area could develop with parties coming up with innovative approaches.

In Varnish's case, the employment tribunal began by looking at whether the agreements entered into between an athlete and a governing body amounted to a contract of employment, and therefore whether Varnish should be considered a worker or an employee.

The tribunal looked at a number of Athlete Agreements that she had entered into with British Cycling over the course of her career (this agreement is based on a template produced by UK Sport, the second respondent in the case and a government-sponsored public body). The tribunal noted that there were specific clauses in the Athlete Agreement that stated that Varnish was not an employee, and that although she received the benefit of services provided by British Cycling under the agreement, there was no entitlement to sums of money.

The Tribunal also looked at funding that Varnish received from UK Sport via an Athlete Performance Award. UK Sport funds a number of athletes through National Lottery funding and they can receive grants ranging from £3,500 to £28,000 per year (paid tax-free). The grant awarded is based on an athlete's projected performance and is means tested. In return for this funding, the athlete enters into an Athlete Agreement with the governing body for their sport. In this case, the governing body was British Cycling. The Tribunal found that the Athlete Agreements accurately reflected the relationship between the parties, and noted that there were clauses that stated that the athlete was not an employee.

Varnish sought to prove that she was an employee due to the 'extreme control' that her coaches had over her. In evidence, she gave examples of coaches listening through hotel bedroom doors, regular blood tests, and having to sign a number of Athlete Agreements. Varnish alleged that her coaches told her that if she didn't sign the agreement she wouldn't be paid that month.

In determining whether there was an employment relationship, the tribunal looked at the level of control the respondents actually had over Varnish. The tribunal found that she had agreed to an element of control under the Athlete Agreement, the purpose of which was to 'recognise the ultimate goal of everyone win medals for the British Team'. They looked at the terms of the Agreement and referred to a number of factors. For example, Varnish could instruct her own coach, rather than one supplied by British Cycling; she had to wear team clothing and use team equipment; and she was subject to imposed behavioural standards in relation to doping and betting.

Ultimately, looking at the whole picture, the tribunal found that Varnish was an athlete and that the Respondents supported her in this. The judge noted that the relationship was 'wholly inconsistent' with a contract of employment and that there was no mutuality of obligation between the parties. In response to the evidence supplied by Varnish regarding coaches listening at hotel bedroom doors, the tribunal found that these examples were not "illustrative of extreme control. Rather, they were illustrative of coaches behaving in a way commensurate with their duties in loco parentis where the athletes were under 18".

The Tribunal also drew an interesting analogy with education, and agreed with British Cycling's submission that the relationship was more in line with that between a university, where education is provided, and a student who may be in receipt of a grant (or more commonly perhaps a student loan) to allow them to access this education. The Tribunal also referred to the earlier case of Daley v Allied Suppliers that held that there is not a relationship of employment "where the purpose is training for the benefit of the trainee".

Ultimately, the tribunal held that Varnish was not employed as an employee or a worker, by either of the respondents individually or under a tripartite agreement. Therefore, she was unable to pursue her claims as the tribunal did not have jurisdiction to hear them.

The Varnish case is not the first time that these sports governing bodies have faced this issue. In 2002, cyclist Wendy Everson argued unsuccessfully that she was an employee of British Cycling. She lost her case on the grounds that she was a competitor and not a member of the staff team of British Cycling. Following this decision, UK Sport's World Class Programme made it clear that the funding allocated to athletes via the National Lottery funded Athlete Performance Award is a contribution towards living and sporting costs rather than payment in return for services.

Given the recent increase in employment status cases, it is perhaps not surprising that Varnish chose this point in time to seek to overturn this earlier decision. Although Varnish was unsuccessful in the Employment Tribunal, she had indicated she will now appeal the judgement to the Employment Appeal Tribunal, and other athletes may seek to bring similar claims.

Importance of the decision

The decision in the Varnish case will be of great comfort to UK sport governing bodies. A finding that Varnish was a worker or an employee would have transformed how British athletes are funded, their relationship with governing bodies and ultimately the face of sports law. If governing bodies were found to be employers of the athletes they work with, they could become subject to a raft of employer obligations, including liability for payments such as holidays, sick pay and pension and to unfair dismissal protection.

They could also be accountable for income tax and national insurance contributions. It has been reported that the tax implications alone could have caused a number of sports governing bodies to go under, and that one in five athletes would have faced a funding cut. Thomas Linden QC, who represented British Cycling, described this scenario as akin to "the skies falling in" for sports bodies in the UK. In a statement released after the decision was published, UK sport said: "The verdict provides reassurance that the relationship between UK Sport, national governing bodies and athletes is as it has always intended to be, which is to provide the means and support for talented athletes to achieve their dreams of realising success at the Olympic/Paralympic Games."

British Cycling also released a statement to say that its "relationship with [athletes] is not one of employer-employee but that of a service provider supporting talented and dedicated athletes to achieve their best".

Whilst Varnish did not succeed in her claim, the attention it has gained in the media has led to a number of athletes speaking out about welfare concerns in sports, and there is greater awareness of the imbalance of power that can exist if a governing body is able to exercise such control over athletes.

The governing bodies involved in this case seem committed to looking at these issues, and UK sport said that they "have already taken action to strengthen the duty of care and welfare provided to athletes and are ensuring that avenues for raising any concerns are effective and appropriate". We may start to see changes in the relationships between governing bodies and athletes in light of this case.

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