The tribunal ruled that it had no jurisdiction to hear a number of employment law claims brought by Varnish against the bodies. British Cycling is the national governing body for cycling and runs the World Class Programme, in which Varnish participated; while UK Sport is a public body which provides funding to elite athletes.
Employment law expert Joe McMorrow of Pinsent Masons, the law firm behind Out-Law.com, said that the case "marks a crucial moment for athletes and the entire sports industry, significantly impacting on funding for the future". Pinsent Masons advised UK Sport in the case.
"If the tribunal had ruled in favour of the claimant, the current funding system for more than 1,000 athletes could have been called into question," he said.
"Funding for athletes needs to be remain distinct from mainstream employment law because onerous limitations, such as administrative costs, would limit the reach of UK Sport's financial resources to support athletes throughout their career. Whilst athletes of course must be afforded rights that serve to protect them, this case underscores that employee or worker status is not the most appropriate framework to provide that protection."
"Whilst it is only right that the claimant's voice be heard, it is clear that if the claimant was found to have the required status to go ahead with her claim, the current system would have required review. Such a review might have included consideration of reducing the direct funding for athletes or the number of funded places available," he said.
"The bottom line is, training and competing in a sport is not the same as earning a living through day-to-day work. Funding to athletes widens access to sport by creating a level playing field through access to training facilities and resources that many could otherwise not afford. This platform gives individuals with the greatest potential the best chance to succeed and compete at the highest level."
The employment tribunals and courts have dealt with a number of recent high-profile cases regarding the employment status of individuals, prompted in part by the rise of the 'gig economy' working model. Individuals who are found to be 'employees' or 'workers', rather than self-employed or independent contractors, are entitled to certain rights and protections.
Varnish brought claims for unfair dismissal, direct sex discrimination and breaches of whistleblowing protections against British Cycling and UK Sport. She argued that she was employed by, or a worker for, one or both of these bodies, as there was 'mutuality of obligation' and she agreed to a high level of control by them.
The tribunal, however, disagreed. It dismissed her claim against British Cycling on the grounds that she was funded by UK Sport based on "an assessment of likely future potential, not on the basis of work done in the past".
"Not only did [British Cycling] not provide [Varnish] with remuneration, neither did they provide work for [her]," said employment judge Ross. "[British Cycling] selected [Varnish] for the World Class Programme. They did not provide her with work. She agreed to train in accordance with the individual rider plan in the hope she would achieve success in international competition."
The judge found that control was a "significant feature" of the relationship between Varnish and British Cycling. However, this was not sufficient to form a contract of employment in the absence of mutuality of obligation and a requirement to personally perform "work" for British Cycling.
"There is no doubt [Varnish] put in huge amounts of personal effort to train hard," the judge said. "However, I have already found that [British Cycling] was not providing the claimant with work so care must be taken with the concept of personal performance."
"The claimant personally performed the agreement to train under the individual rider plan - that is obvious and inevitable: she had been individually selected because of her own ability to be on the programme. However she was not personally performing work provided by the respondent. Rather she was personally performing a commitment to train in accordance with the individual rider agreement in the hope of achieving success at international competitions. I find that does not amount to personal performance consistent with a finding of a contract of employment," the judge said.
The tribunal then went on to dismiss Varnish's claim against UK Sport, as there was no "day-to-day relationship" between the two of them and they had no control over her. In addition, there was no 'tripartite arrangement' where each body performed some of the functions of an employer, as the relationship between British Cycling and UK Sport was not sufficiently close.