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Employment Law Case Update: Employment Status

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Employment status has been a hot topic in recent years, and it has continued this year with the recent case of J Varnish v British Cycling Federation t/a British Cycling.  Our Employment Law team reviews the case and explains the importance of ensuring your employees and workers are on the correct contracts.

Ms Jessica Varnish, a professional cyclist in the British Cycling programmes since she was 12 years old, entered into an Athlete Agreement with British Cycling as a member of their Podium Programme in November 2015. Under this agreement, British Cycling provided coaching, training facilities and other benefits. In return, Ms Varnish agreed to train with the British Team squad, enter competitions, and maintain a high level of physical fitness. This agreement explicitly stated that Ms Varnish was not an employee of British Cycling.

In March 2016, the agreement was terminated by British Cycling for “performance-related reasons”. Ms Varnish subsequently submitted claims to the Employment Tribunal (ET) against British Cycling and UK Sport for unfair dismissal and discrimination. However, in order for these claims to succeed, Ms Varnish first had to establish that she was an employee of British Cycling.

The ET ruled that Ms Varnish was not an employee of British Cycling after examining whether there was a “mutuality of obligation” between the parties, akin to a “work/wage bargain.” The ET found that while Ms Varnish trained very hard in accordance with the Athlete Agreement, she was “not personally performing work provided by [British Cycling]”. Further, the ET found that there was no obligation on British Cycling to provide work, as there would be in an employment relationship.

Regarding the benefits provided by British Cycling to Ms Varnish, the ET found that these were not remuneration, but services provided to Ms Varnish to help her attain the common goal of winning medals in international competitions.

By participating in British Cycling’s Podium Programme, Ms Varnish was eligible to apply for a grant from UK Sport. The ET found that this too did not amount to a wage as the grant was means tested and was based on future potential, not past completed work.

Ms Varnish appealed to the Employment Appeal Tribunal (EAT). Her main ground of appeal was that the ET erred in law by finding there was no “mutuality of obligation” between herself and British Cycling. Ms Varnish’s lawyers argued that the obligation to train hard with the purpose of achieving medals for the British team should be considered work. Further, they argued that the ET’s understanding of remuneration was too narrow, and that the benefits provided to Ms Varnish by British Cycling should be considered remuneration in kind.

The EAT rejected this argument, finding that the ET had properly considered whether there was a mutuality of obligation. The EAT accepted the ET’s reasoning that providing Ms Varnish with training facilities and services did not mean British Cycling provided her with “work”. It also found that the ET properly considered the facts and was entitled to come to the conclusion that her training “did not amount to personal performance of work or services” for British Cycling.

The EAT agreed with British Cycling that the benefits provided to Ms Varnish were services provided to help her achieve her best performance, and were not remuneration. It was open to the ET to find that the discretionary nature of the benefits provided by British Cycling was “inconsistent with an obligation to pay” as would exist in an employment relationship.

Though the EAT agreed in this case that Ms Varnish was not an employee, it did state the outcome “does not mean that in another case, where perhaps the contractual provisions, and the balance between services provided to and performed by the athlete, are different, the training done by a cyclist could not be found to amount to work.” This may leave the door open to future employment claims by high performing athletes.

This case is significant for the status of athletes in high performance sport in the UK. Had Ms Varnish been successful she would have been able to move forward with her claim of unfair dismissal and discrimination. However, the impact of such a decision would have opened the door to athletes from other sports claiming employment status and its accompanying protections. It could have also had a significant impact on how sport is funded in the UK, as bodies such as British Cycling would need to pay national insurance and pension contributions for their athletes.

On a broader level this case demonstrates how classifying an individual as an employee is not always a straightforward exercise. Courts need to examine the entire agreement and the surrounding facts to determine the true nature of the relationship.

If you have any questions regarding this article, you can call our Employment team today on 023 8071 7717 or email employment@warnergoodman.co.uk.

This was previously part of our weekly Employment Law Newsletter. If you would like to subscribe, please email us at events@warnergoodman.co.uk or just fill in our subscription form.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.