The National Golf Clubs’ Advisory Association (NGCAA) details the law if agreement cannot be reached between a golf club and the pro to vary the terms upon which the professional is retained.
Golf professionals are an important part of most golf clubs. They play an important part in attracting and retaining members; golf clubs rightly expect their professionals to add value. Equally, golf professionals need to be able to earn a living, and be rewarded for their efforts and the risks they take in business.
Frequently, the NGCAA is asked to advise clubs that feel they cannot continue with their professional on the same terms (or at all) – more often than not because the pro has become too expensive or because the pro is not performing to the required standard.
The economic climate and financial challenges golf clubs face means historical arrangements may not be viable. If agreement cannot be reached to vary the terms upon which the professional is retained, and the professional’s contract is terminated, employment status becomes an important issue. Is the pro an employee or self-employed?
If they are an employee, they may claim unfair dismissal, so it is important to understand the law when considering their status and what steps might be taken.
There are three categories of employment status, broadly as follows:
- Employee – an individual who has entered into or works under a contract of employment or apprenticeship, whether express or implied, and whether oral or in writing.
- Self-employed independent contractor – an individual who carries on a profession or a business undertaking on their own account and enters into contracts with the club as client / customer to provide work or services for it.
- Worker – there is a hybrid category of ‘worker’, an individual who works under a contract with the club to personally perform work or services for the club other than where the club is a customer or client.
Establishing the employment status of an individual is important, particularly to understand the rights and obligations of the club and individual (see forthcoming list of employee and worker rights).
Beware that an individual may be self-employed for tax purposes, but a worker or employee in employment law. The HMRC decides status for the purpose of determining liability to income tax and VAT only, and uses a different test to that which a tribunal or court would use for determining employment status (although similar).
Factors indicating that an individual is an employee:
1) Contract of employment – a contract of employment exists between the club and individual, which is not a sham.
2) Mutual obligations – the club is under an obligation to provide the individual with regular work and the individual is under an obligation to be available to do the work.
3) Personal service – the individual is required to provide their services personally.
4) Control – the individual is under the control of the club and the club controls what the individual does, how they do it and when they do it. However, those in senior, professional or skilled positions may have control over how they carry out their work but still be employees. The individual is also expected to conform to club rules and standards that apply to other employees, such as behaviour or dress codes.
5) Exclusivity – the individual is not normally free to work for other organisations without the express permission of the club. The individual may be subject to restrictive covenants in their contract.
6) Nature and length of the engagement – the length of the engagement is not determined (except with fixed-term contracts) and does not relate to the performance of a specific task.
7) Pay and benefits – the individual is paid a fixed amount on a regular payment date irrespective of performance targets or completion of a specific task (however shift workers may be employees). They will be entitled to holiday, sickness and maternity leave and pay. They may receive a pension, benefits and be entitled to company sick pay.
8) Integration – the individual is integrated into the company. For example, they perform services which are similar to or substantially the same as those of an employee, their name appears on the internal telephone directory, they have a company email address, they wear a uniform and they have a company business card.
9) Facilities and equipment – the club provides the individual with the facilities and equipment required by them to carry out their job.
10) Financial risk – the individual is paid even if there is not enough work to keep them fully occupied. The individual assumes no financial risk in working for the club.
11) Taxation – the individual is not responsible for payment of income tax and national insurance contributions (NICs) on their earnings.
Factors indicating that an individual is self-employed:
1) Contract – the individual operates under a ‘contract for services’ or ‘consultancy agreement’.
2) No mutual obligations – the club is not obliged to offer work and the individual has no obligation to accept any work that is offered.
3) Absence of control – the individual can determine when and how they work and are not under the direct supervision of the club.
4) Personal service – the individual is not required to carry out the services personally and can appoint a substitute.
5) Non-exclusivity – the individual is free to provide their services to anyone without operating exclusively for the club.
6) Nature and length of the engagement – the individual is engaged for a finite period to carry out a specific task or project.
7) Pay and benefits – the individual is paid on completion of a specific task or project or on a commission-only basis. They are not entitled to sick pay or to participate in any benefit schemes, and will not normally be paid overtime. The individual may quote for work and submit invoices for work done.
8) Integration – the individual is not integrated within the club, does not have a defined role and does not perform services similar to or substantially the same as those performed by an employee.
9) Facilities and equipment – the individual provides their own equipment and materials needed to perform the services.
10) Financial risk – the individual risks their own capital, is responsible for losses arising from their work, and may have to correct any unsatisfactory work in their own time and at their own expense. They may have the opportunity to profit from the success of the project.
11) Taxation – the individual is responsible for payment of their own income tax and NICs on their earnings and for VAT registration.
Rights of employees
An employee has a number of employment rights (some of which require a minimum length of service) including rights to:
- Statutory Sick Pay
- the National Minimum Wage
- statutory maternity, paternity, adoption and shared parental leave and pay
- annual leave and pay
- the right to request flexible working hours
- the right not to be discriminated against under the Equality Act 2010
- protection against unfair dismissal
- minimum notice periods
- statutory redundancy pay.
Rights of workers
Workers are entitled to certain employment rights and protection such as:
- the National Minimum Wage
- protection against unlawful deduction from wages
- holiday pay and working time rights such as rest break and the maximum working week
- the right not to be discriminated against under the Equality Act 2010.
Whilst the professional’s written contract will not alone determine employment status, it is always the starting point. A well drafted contract – with consideration of employment status issues, can make a big difference.
Think twice before imposing a contractual change or serving notice to terminate the professional’s contract. Your club may expose itself to risks of claims in the courts and employment tribunal.
The realities of the relationship you want (or have) with your professional will influence whether the professional is, as a matter of law, an employee. By understanding the day-to-day ‘indicators’ / factors relevant to the employment status, clubs can shape the way the relationship is in reality and thus minimise the chances of your club (albeit inadvertently) creating an employee / employer relationship.
Clubs should seek early advice before deciding to terminate or change a professional’s contract. NGCAA members may contact Alistair Smith in the first instance on 01886812943 or firstname.lastname@example.org – a clear and legally informed approach can help achieve a resolution much sooner.