Super Guarantee | Jockeys held to be employees of racing clubs
02/09/2024
The Administrative Appeals Tribunal (AAT) ruled that jockeys racing for various NSW horse racing clubs are employees under the Superannuation Guarantee (Administration) Act 1992 (SGAA), requiring each club to make super contributions on riding fees paid to the jockeys.
This decision is reflected in 5 separate applications by 5 horse racing clubs (Armidale Jockey Club, Australian Turf Club Ltd, Clarence River Jockey Club, Grenfell Jockey Club Ltd, and Illawarra Turf Club) on assessments issued by the ATO about superannuation guarantee charges (SGC) from 30 September 2009 to 30 June 2014.
The AAT accepted the ATO’s argument that the horse racing clubs were liable for SGC regarding the payments made to jockeys as the payments fall under section 12(8) of the SGAA. This section applies to individuals who are paid to participate in the performance or presentation of sport, music or other artistic activities.
Other racing clubs across the country may face similar superannuation liabilities for jockeys if they are legally liable to make the payment to the jockeys for similar activities. Additionally, it could have broader implications for other sports and industries with similar payment structures.
Facts of the cases
In 2020, the ATO issued notices of assessment for SGC to all 5 clubs on the basis that jockeys who participated in horse races conducted by the clubs between 2009 and 2014 were employees of the clubs.
The central issue was whether the jockeys were “employees” of the racing clubs under the SGAA. The clubs argued that the jockeys were either independent contractors or employees of the horse owners or trainers, asserting that the clubs should not be responsible for their superannuation.
Section 12(3) and 12(8) of the SGAA
The AAT examined sections 12(3) and 12(8) of the SGAA to determine the employment status of the jockeys. Section 12(3) defines an employee as someone who works under a contract that is wholly or principally for their labour. The tribunal rejected the clubs’ argument that this section applied, pointing out the absence of formal contracts between the jockeys and owners or trainers that would establish a labour-based relationship.
However, the AAT found that section 12(8) did apply. This section states that a person paid to perform or participate in a sport is deemed an employee of the entity liable to make that payment. Since the racing clubs were responsible for paying the jockeys’ riding fees, they were deemed to be the employers for superannuation purposes.
Role of NSW Local Racing Rule LR72
A critical factor in the tribunal’s decision was the interpretation of NSW Local Racing Rule LR72. This rule obligates racing clubs to pay jockeys’ riding fees directly, with the fee amounts set by Racing NSW. The AAT confirmed that LR72 created a direct payment obligation for the clubs, leading to the application of section 12(8) of the SGAA. The clubs’ argument that they were merely intermediaries paying on behalf of owners or trainers was rejected, as the rule placed the liability for payment on the clubs themselves.
Decision
The AAT considered that the racing clubs failed to sufficiently evidence the existence and contents of any contracts between the jockeys and the owners/trainers. Instead, the evidence suggested that jockeys are engaged on a race-by-race ad hoc basis.
It was determined in each of the matters that section 12(8) of the SGAA was the most appropriate provision to apply between the clubs and the jockeys as it was not possible to determine the common law employer of the jockeys based on the evidence.
The AAT further found that the SGAA does not contemplate multiple employers for one activity and the use of the term “the person” as opposed to “a person” in section 12(8) means that only one person can be liable at a time for payment of the same performance.
Implications for the racing industry
Beyond the immediate financial impact on the five clubs involved, many other racing clubs across the country may face similar superannuation liabilities for jockeys if they are legally liable to make the payment to the jockeys for similar activities. The decision reinforces the obligation of racing clubs to treat jockeys as employees under the SGAA, potentially leading to substantial superannuation contributions and increased administrative burdens for these clubs.
While this ruling specifically addresses the racing industry, it may have broader implications for other sports and industries with similar payment structures. The definition of “employee” in Section 12(8) includes individuals engaged in various types of activities, such as performers, presenters, service providers, and media production workers, who are paid for their participation or services. This ensures that these individuals are considered employees for superannuation purposes in certain circumstances, obligating the paying entities to make the necessary contributions.
Thus, any organisation compensating individuals to perform or participate in sports, entertainment, or media production could be scrutinised under section 12(8) to determine if they have similar superannuation obligations. This could set a precedent for interpreting deemed employment relationships where traditional notions of employment are unclear, potentially leading to broader implications across multiple industries.
How SW can help
This decision highlights the expansive nature of the provisions of the SGAA, emphasising the importance of having clear contractual terms that set out who is liable for any payments made for sporting, entertainment or artistic performances.
SW can help you implement appropriate measures and make necessary disclosures about SGC and other employment tax obligations—contact your SW advisor to discuss how this decision affects you and your business.
