updated on 19 November 2019
QuestionWhat are the commercial implications for national governing bodies if funded athletes are given employment rights?
Employment law is consistently changing, mainly due to the vague and contentious definition of ‘employee’ and the complicated test under the case of Ready Mix Concrete (South East) Ltd v Minister of Pensions and National Insurance. Equally, there is potential scope for funded athletes to obtain ‘worker’ status which follows in a similar vein to the Ready Mix case. As a result, companies have to carefully word employment contracts, tighten up HR practices and ensure that the structure of their business clearly shows their relationship with their staff.
Funded athletes – those who train through UK Sport funding and their respective national governing body (NGB) – are just one type of potential employee/worker. Below are some commercial issues that should be considered if an NGB becomes subject to employment rights obtained by athletes.
Access to funding
NGBs are self-governed bodies that are set up as non-profit organisations with the sole intention of providing access to sport and to provide access to world-class programmes for their athletes to compete on an international and national basis.
Grants from UK Sport generally fund NGBs. This means they can then organise and coordinate their world-class programmes and tournament calendars, as well as provide training programmes and employ staff to oversee operations.
There are two associated issues that an NGB is at risk of in relation to funding if an athlete obtained employee/worker rights. The first would be where UK Sport is considered an employer as well as the NGB. This was a submission put forward in a recent tribunal involving Jess Varnish. If the court found in favour of Varnish, there was a real and immediate risk that UK Sport would have had to restrict the scope of its funding. This is because of the associated costs involved in dealing with employee/employer issues as discussed below, and the potential litigation costs that would need to be considered.
Further, if an NGB is found to be an employer, the same issue would arise with administrative issues, except that the NGB would not be able to invest the same level of its funding into the development of its world-leading training programmes or take on the best support staff to help drive that agenda forward.
Therefore it will be integral for any NGB to consider alternatives to funding. When Badminton England had its funding cut in 2017 by UK Sport, it had to consider alternative financial arrangements and made this a part of the organisation’s 2017-2025 strategy.
HR practices and employment of HR personnel
A natural repercussion of establishing employee/worker status is administrative issues such as PAYE schemes, minimum holiday entitlement and other employee/worker protections that can be found under the Employment Rights Act 1996. Equally, auto-enrolment has put further administrative burdens on employers in relation to employee pensions.
With this, immediate costs arise relating to training HR Staff, ensuring the NGB is compliant with their requirements as an employer and in turn to prevent any potential litigation from individuals or investigations by external bodies such as HMRC. The likelihood is that many NGBs will have full-time staff and, therefore, HR procedures will be in place.
However, at the time of writing, there are 51 registered athletes at British Cycling. If all of those gained immediately obtained employee/worker status, there would be an immediate pressure on central management to prepare for this. To ease this burden, it would be advisable to discuss with the NGB what procedures it already has in place for full-time staff (if at all) and see if these are flexible enough to deal with each athlete. If they are not, it would be beneficial to consider a strategic review to comply with this. However, as this will come at a cost, this should really only be considered if there is a real and foreseeable risk that funded athletes may obtain such legal status.
Therefore, any commercial lawyer advising an NGB on the potential employee/worker status of an athlete would benefit from making strategic recommendations around consistent and well-drafted policies. This ensures that any new athlete entering the system has appropriate measures in place to have their signed contract and HMRC requirements dealt with from the onset of starting their training.
Another possible measure would be to draft their Athlete Performance Agreement and training programme in such a way that does not reflect that of previous athletes who have since gained employee/worker status. Employee and worker status is generally always ascertained in litigation on a case-by-case basis. However, given that athletes will tend to have a precedent contract in place, there would be a snowball effect if one person obtains employee status. As a commercial lawyer, directing an NGB to someone in your employment team will provide a good opportunity for them to consider the drafting carefully and deal with any vague, ambiguous or strict clauses.
Finally, if athletes do obtain employee/worker status, the possibility of litigation may potentially increase if NGBs are reactive rather than proactive in this change. This is due to the associated risks as employees and workers are entitled to greater legal protection.
Employees and workers under the Working Time Regulations (1998) have protection in relation to their working hours, for example, rest breaks (Regulation 10) and 48-hour working weeks (Regulation 4). Athletes can often train for long periods and what can be considered working hours is generally blurred due to the lifestyle commitments an athlete would make to reach performance targets. Due to the unique position an athlete is in, this could be a contentious matter, should they feel they are being overworked during these training blocks.
Regulation 20 (unmeasured working time) is an exception to Regulation 4, which offers protection to NGBs. Regulation 20 prevents an employee or worker from bringing a claim against their working hours if they determine what hours they work. This could be where athletes are completing long training programmes, which coupled with the commitments outside of the training they complete at their NGB's training site (ie, diet, sleeping patterns and any training they have to complete outside normal coaching time) may create a blurred line as to what is considered working hours. As found in the Varnish tribunal, it was considered that she had control over her training programme and developed this alongside her coach. Therefore Regulation 20 could favour the NGB.
However, this is a defence and therefore it is a reactive rather than proactive remedy. If early communication setting out terms of the athlete's employment is not carried out, then this again only acts as a potential defence in litigation rather than actually reducing the risk of it happening altogether. It is therefore advisable to discuss with any NGB you may act for early on as to any current issues with their athletes in relation to any relationship break down or drop in form during training and competition. By doing so, early communication can be advised as to how best to approach their athletes to ensure positive relationships can be maintained.
Oliver Bramley is a first-year trainee solicitor at DWF. He is based at the Manchester office.