Landmark Ruling in UK Confirms Funded Professional Athletes not Considered as Employees
Olympic cyclist loses unfair dismissal case against British Cycling and UK Sport

 

This article is the first in our Employment Law in Sport series to be published over the course of 2019. 

Background

Jess Varnish, a track cyclist who competed for Great Britain in the London Olympics in 2012, has lost her claim for unfair dismissal against British Cycling and UK Sport. 

Ms Varnish, who broke a world record in the qualifying stages of the London Olympics, was dropped from the Great British cycling team a few months before the Rio Olympics in 2016. She claimed she was unfairly dismissed from her contract. To sue for unfair dismissal, she first needed to pass the preliminary hurdle of proving that she was an employee of British Cycling (the governing body for cycling in the UK) and UK Sport (the state body responsible for funding Olympic and Paralympic sport in the UK) rather than self-employed.  

At a hearing in December 2018, the Manchester Employment Tribunal considered the preliminary issue of whether Ms Varnish was an employee of British Cycling or a self-employed athlete merely funded by British Cycling and UK Sport. Athletes of various disciplines may qualify for state funding. In Ireland, Sport Ireland distributes funding to eligible athletes involved in high performance training, such as those training to qualify for the Olympics. 

On 16 January 2019, the Manchester Employment Tribunal ruled that Ms Varnish was neither an employee nor a worker of British Cycling or UK Sport. As a result, she was unable to bring unfair dismissals proceedings against her "alleged" employers, British Cycling and UK Sport. 

This provides some certainty for the relationship between athletes and their governing bodies in the UK. However, Ms Varnish has stated that she will consider whether to appeal the decision or not in the coming weeks. 

We consider the implications if a similar case was heard in Ireland. 

Irish position

Under Irish law, there is a distinction between employees and individuals who are self-employed and recent UK cases regarding the 'gig economy' have added to this debate in Ireland too. Unlike in the UK, there is no distinction in Irish law between employees and workers. 

This distinction between employees and individuals who are self-employed gives rise to different tax implications, employment rights, as well as differences in insurance liability. The key characteristics to consider when determining whether a person is an employee or self-employed include:

  1. the personal provision of services by the 'employee' to the 'employer';
  2. the control exerted by the 'employer' over the 'employee'; and
  3. the 'employee's' freedom to work for others.

Similarly, to Ms Varnish's case, it is difficult to see how a successful argument could be made that athletes in Ireland provide services to their governing body (such as Cycling Ireland) or to Sport Ireland in return for a wage. Even where athletes are part of a central training programme, it would seem they are pursuing personal achievement. 

However, athletes may be subject to a level of control by Sport Ireland or the relevant governing body where their funding is subject to hitting certain targets or there is a requirement to train in a particular location, such as the National Sports Campus, or with a particular training group or coach. Regardless of this and similar to the finding in Ms Varnish's case, a mutuality of obligation would need to be established by the athlete. 

In determining whether an individual is an employee or self-employed for the purposes of Irish law, the Workplace Relations Commission and the Courts will have regard to the level of control in the relationship as well as the nature of the provision of services. If this issue were to arise in Ireland, despite the level of alleged control exercised, for the argument to succeed the athlete would have to establish that he or she provides services to the governing body or funding body, rather than competing for their own personal achievement.

Potential consequences

There are numerous implications for the potential 'employing entity' in a determination being made as to whether an individual is employed or self-employed. For example, if athletes were considered employees, then they would benefit from a number of protections such as holiday entitlements and other employment law protections such as those provided by the unfair dismissals legislation and to which their governing body and / or Sports Ireland would be liable.

Perhaps the most notable implications in Ireland may be taxation changes. Those that are self-employed are liable to pay income tax once a year, following a self-assessment of the tax owing. Additionally, self-employed individuals are responsible for the payment of their own Pay Related Social Insurance ("PRSI") and the Universal Social Charge. However, an employer is responsible for the calculation and payment (deducted from income) of an employee's income tax due as well as making an employer's PRSI contribution on behalf of the employee.

If a similar case was brought in Ireland and it was decided that an employer / employee relationship existed, funding would potentially have to be diverted towards paying for employer PRSI contributions, holiday pay and pensions. This change would probably result in a revamp of how athletes are funded by their governing bodies and Sport Ireland, and in turn could leave less funding available resulting in fewer fully-funded professional athletes. 

Conclusion

A finding that an athlete is an employee, where previously assumed to be self-employed, could have had a transformative impact on certain professional sports in the UK and such a finding in Ireland could have unintended consequences for Sport Ireland and Irish sporting governing bodies. Although the Jess Varnish decision will not have legal effect in Ireland, it may be of persuasive value if a similar issue was raised before the Irish courts. An appeal, reportedly being considered by Ms Varnish, must be issued within 42 days of the Manchester Employment Tribunal's ruling.

For further information, please contact Catherine O'FlynnCraig Sowman or Derek Hegarty or your usual William Fry contact. 

Contributed by: Patrick Murphy and Darran Brennan

 

Twitter

 

Follow us @WFEmploymentLaw @WilliamFryLaw


Key Contacts

Craig Sowman Partner

Derek Hegarty Partner

Related Practice Areas

Related Industry