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Football clubs facing penalties over ‘casual’ workers

It’s sports focus week on Bdaily. Here, Andrew Macdonald, senior solicitor in Mills & Reeve’s sports team, looks at the pervasive issue of casual workers in football clubs.

With the new football season well underway, football clubs across the country are looking to make progress on the pitch and put points on the board, much of which will be down to their players and management staff.

But what about the other staff engaged by clubs vital to their day to day operations? Think backroom staff (such as sports scientists) and match day staff, including turnstile operators, stewards, ball-boys, mascots, hospitality and catering staff.

These ‘key players’ are often engaged as casual workers under zero hours contracts, whereby workers agree to be available for work but with no guaranteed hours and are only paid for work done. Such contracts are used where flexibility is needed to meet short-term staffing needs without taking on the obligations associated with contracts of employment. For football clubs, this gives them a pool of people who are ‘on call’ and can be used as and when the need arises, which can depend on when and how often matches take place.

A survey of employers by the Chartered Institute for Professional Development (CIPD) estimates around 3-4 per cent of workers in the UK are currently on these contracts, equating to approximately one million people. Yet, there are a number of legal issues associated with zero hours contracts and casual staff, the principal issue being that of employment status - are those working under a zero hours contract ‘employees’ or ‘workers’?

Worker or Employee

This is a key consideration as those with ‘employee’ status are afforded a number of important legal rights that ‘workers’ are not, such as the right not to be unfairly dismissed, family friendly rights (including maternity rights) and the right to receive a statutory redundancy payment. It is important to remember that ‘workers’ still have rights, including receipt of the National Minimum Wage (NMW) and protection from discrimination.

To determine whether an individual is a ‘worker’ or ‘employee’, the legal starting point is to establish whether there is:

(i) an obligation to perform work personally

(ii) an obligation on the employer to provide work and the individual to accept that work

(iii) an agreement by the worker to be subject to the control of the person for whom he works to a sufficient degree

If answering yes to the above, the individual is regarded as an ‘employee’. With zero hours contracts, these are not apparent features, for example there is no guarantee of work.

Nonetheless, courts and tribunals will ‘look behind’ contractual documentation to assess the true nature of the working relationship between parties and if that contract is ultimately a sham, intended only to circumvent rights and responsibilities, a contract of employment is likely to be found. Football clubs should be alive to this fact and not wait until a disgruntled staff member asserts rights against the club, at which time it could be too late.

Payment Rights

On 1 October 2013, the NMW increased to £6.31 per hour for workers aged 21 and over. Yet, HM Revenue & Customs’ (HMRC) research revealed clubs were advertising positions which did not comply with this.

On 20 August 2013, just as the new season was kicking off, HMRC announced professional football clubs who failed to pay their staff the NMW could expect enforcement action. It promptly wrote to 44 football clubs in a pre-emptive strike with a clear message that an enforcement clampdown would be the ultimate consequence of failure to comply.

Moreover, those working on zero hours contracts are expressly covered by the National Minimum Wage Regulations 1999 as ‘time workers’ and are entitled to pay for all hours they are required to be at or near work and available for work even if they are not actually given any work during this time.

The HMRC clampdown is a further example of the continuing discord that exists between it and football clubs – not least on account of the controversial ‘football creditors rule’ which comes into play when a club enters an insolvency procedure. If a club enters insolvency proceedings it is suspended from its league until certain creditors are paid in full.

These creditors include players and management staff, as well as other football clubs who might be owed money. However, importantly, HMRC is not considered a football creditor, which has resulted in several instances of highly paid players getting their money in full while HMRC receives only a fraction of what it’s owed.

As the Football Association Rules 2013-2014 make clear, the definition of ‘Football Creditor’ also encompasses any current or former full-time and part-time employees. The true employment status of a football club’s member of staff is therefore also important from this angle as it will impinge on whether that individual falls within the football creditor bracket or not.

Fair Play

While the flexibility of zero hours contracts and other casual working arrangements might appeal to (and be in the best interests of) football clubs, careful thought should be given to the nature of the role. The perception is that casual workers have very few rights, however in reality this is a simplistic and naive outlook, and clubs should consider the risks associated with not acting fairly and lawfully towards such staff.

If, in practice, the working relationship between the parties demonstrates a contract of service, clubs could face costly and time consuming litigation, as well as enforcement action from HMRC where NMW obligations are not met. They’d also do well to bear in mind these individuals are normally fans of the team and part of the fabric of the club.

This was posted in Bdaily's Members' News section by Mills & Reeve, Manchester .