Sports governing bodies and their insurers keenly await the decision of the Employment Tribunal in the recent high profile case brought by cyclist, Jess Varnish against British Cycling and UK Sport for wrongful dismissal and sex discrimination.

Jess Varnish, who received a tax-free grant from UK Sport towards living and training costs, failed to achieve the qualifying standard for Rio 2016 and was dropped from the elite cycling programme by British Cycling. She alleges (amongst other things) that at the time she was dropped she was told to "go and have a baby" by a coach.

The tribunal, which was heard in December 2018, will rule on whether Miss Varnish, as an athlete subject to an agreement with British Cycling who received funding through UK Sport, was an employee of British Cycling and / or UK Sport. Her arguments centre around British Cycling exercising extreme control over cyclists, sufficient for an employment relationship to exist. British Cycling argue the agreements funded athletes signed were not sufficient for contracts of employment. UK Sport argue, broadly, there was no employment relationship and the grant was provided to allow the athlete to prepare as best they could for events, in essence to succeed on their own account.

The case follows the recent 'gig economy' cases. The Court of Appeal recently upheld a finding that Uber employed drivers as workers for the purposes of the Employment Rights Act 1996 ("the Act") (see DAC Beachcroft alert, Majority of Court of Appeal find that Uber drivers are workers, dated 20 December 2018). In analysing the relationship between Uber and its drivers the Court of Appeal upheld, by a majority, the Employment Tribunal and Employment Appeal Tribunal decisions to reject the label of agency workers contained within the written documentation as not properly reflecting reality.

In June 2018 the Supreme Court held that a plumber engaged by Pimlico Plumbers under written agreements which stated the Company was not obliged to offer work and he was not obliged to accept it, fell within the definition of worker for the purposes of the Act. Again, an analysis of the true relationship between the parties was undertaken. Here, the Plumber was required to wear a company uniform, carry a Company mobile phone and hire a Company van whilst carrying out their work.

The decisions in the gig economy cases have had wide-ranging consequences for the Companies involved and for other Companies that engage individuals as independent contractors pursuant to written agreements between them.

If it is found that the relationship between Jess Varnish and British Cycling / UK Sport is sufficient for an employment relationship to exist, those organisations, as well as other sports governing bodies who have agreements with funded athletes will have to re-consider their obligations to those athletes. In addition to other civil claims for compensation from former funded athletes who had not appreciated the true extent of the relationship between them, such considerations would extend, but would not be limited to, considerations of tax, benefits and pensions.

The decision of the Employment Tribunal is expected by mid-January 2019. If it is found that an employment relationship exists the tribunal will be reconvened in 2019 to consider the matter further.