Employment status of athletes & sports coaches: everything you need to know

3. How is employment status determined in practice?

Courts and tribunals consider the actual working relationship, not just the contract label.

Key tests are:

• Control – Does the club control how and when the work is done?
• Mutuality of obligation – Is there an obligation to offer and accept work?
• Personal service – Can the individual send a substitute?

Further indicating factors are:

• Integration – Is the individual part of the club’s structure?
• Financial risk – Who bears the cost of poor performance or cancellations?

No single factor is conclusive; tribunals and courts weigh them all.

4. Are professional players/athletes employees?

It depends.

Many club-based athletes such as footballers and rugby players are employees due to being subject to:

• Full-time contracts requiring personal service
• Mandatory structured training schedules demonstrating an obligation to provide and perform work and a significant degree of control over how and when players work
• Disciplinary and conduct policies highlighting a significant level of control over the way work is performed
• Use of club facilities and equipment indicating player integration within the club’s structure and that the club bears financial burden.

There are also regulatory considerations specific to the sport – the Premier League rules and FA rules prescribe that professional footballers cannot be engaged as self-employed contractors, and plainly they are under their club’s control and direction.

However, individual athletes such as tennis players or boxers are often self-employed – sourcing their own income, sponsorship, and training.

This has been a disputed territory, with the Employment Appeal Tribunal (EAT) leaving scope for future challenges in the case Jess Varnish v British Cycling. Jess Varnish submitted in that case (that was ultimately unsuccessful in the EAT) that she was either an ‘employee’ or a ‘worker’ of British Cycling within the meaning of the Employment Rights Act 1996. The EAT underscored the fact sensitive nature of the Tribunal’s assessment of a claimant’s status:

“In our judgment, that was a conclusion that the Tribunal was entitled to reach and does not disclose any error of law. The Tribunal’s conclusion 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. The legislation does not seek to define what is meant by “work” or “service”. The constantly evolving nature of what is regarded as amounting to work or service would probably make such definition impossible, or at least liable to be quickly outmoded. Not all work will be of the kind that gives rise to an employment relationship…It is left to the Tribunal, having found that there is a contract, to consider all the relevant factors (including the nature of the work done) and assess whether the contract is one of service or not.”

This highlights the evolving nature of employee and worker status, especially in the rapidly changing world of work and professional sport.

5. Are sports coaches employees or contractors?

Again, it depends on the level and engagement structure:

• Employed: Full-time academy or club coaches with fixed hours, salary, and obligations.
• Self-employed: Freelance coaches working across multiple venues or clients, setting their own rates and schedules.
• Mixed-status or worker status: Part-time coaches may straddle more than one status category for different projects, or be classified as workers meaning they are afforded worker protections but not full employment rights.

6. What are the tax implications of employment status?

HMRC applies similar tests to determine tax status by applying the multi-factorial approach which is rooted in case law, in which the leading authority is Ready Mixed Concrete. Misclassification can lead to significant tax consequences for the engager/client, and they may become liable for:

• Backdated PAYE and National Insurance Contribution (NICs) liabilities;
• Penalties and interest; and
• Increased HMRC scrutiny and investigation.

HMRC’s “Check Employee Status for Tax” (or CEST) tool can help assess tax status, but legal advice is often required for borderline cases, where there are some indicators for each of employment and self-employment.

Clubs and athletes must be wary of what is generally referred to as the “IR35” and “off-payroll worker” rules in cases involving personal service companies. Under these rules, if the individual works via an intermediary, and the individual is deemed to be an employee for UK tax purposes, the client that engaged the employee must operate PAYE and NICs. Failure to do so may result in backdated taxes and late payment may result in the accumulation of penalties and interest.

7. What key statutory employment rights apply to athletes and coaches?