Supreme Court Ruling Highlights Importance of Employment Status Review for Construction Firms

As the new football season kicks off, a significant Supreme Court decision issued this week, unrelated to the action on the pitch, is set to have important implications for many sectors, particularly the construction industry

In this landmark decision, the Supreme Court found that mutuality of obligation and control were present in the relationships between professional football referees and their governing body, the Professional Game Match Officials Limited (PGMOL). On 16 September 2024, the Supreme Court ruled in favour of HM Revenue & Customs (HMRC) in the PGMOL case, focusing on key factors of employment status: mutuality of obligation (MOO) and control. This ruling sets a strong precedent and carries important implications for construction companies that engage self-employed workers and Personal Service Companies (PSCs).

Understanding the Ruling
Traditionally, the lack of mutuality of obligation and control along with personal service has been very important in maintaining self-employed status. However, the Court’s finding that MOO and control were present, or at least could not be as easily ruled out as previously believed, suggests that these factors may exist in many contractor relationships, including those common in the construction industry. This development indicates that proving the absence of MOO and control will be much more challenging in the future. Construction businesses must now focus more on other factors when determining self-employment status to ensure compliance and mitigate risks.

Expert Insight
Brian Byrne of Ardent Tide, specialists in employment status and workforce engagement, advises construction businesses to take proactive measures in light of the ruling.

“The Supreme Court’s decision highlights that mutuality of obligation and control are often present in contractor relationships,” says Brian Byrne. “This ruling underscores the importance of not relying solely on these factors. It’s essential to examine other elements of the working relationship. By doing so, businesses can better ensure compliance and continue to benefit from the flexibility that professional tradespeople and consultants offer.”

Moving Forward
The ruling may prompt HMRC to examine contractor relationships more closely. This Supreme Court ruling serves as a timely reminder for construction business owners of the importance of regularly reviewing employment practices. Businesses should reassess how they engage with contractors, ensuring that working arrangements genuinely reflect self-employment status. Clear contracts and careful consideration of all aspects of the working relationship are now more important than ever.

About Ardent Tide
Ardent Tide is a leading firm specialising in status compliance and workforce engagement. We help construction businesses fully protect themselves from risks when utilising the services of self-employed CIS operatives. By removing status risks, we enable our clients to concentrate on running their construction businesses. We also support and advise firms with IR35 concerns, assisting them in navigating the complexities of engaging PSCs.

For more information and assistance, please contact Ardent Tide,  your trusted partner in workforce engagement and compliance. Their team is dedicated to helping businesses stay compliant and thrive in a changing regulatory landscape.