Earlier this month, ousted British track sprinter Jess Varnish won a bid to sue British Cycling and UK Sport over her dismissal from the high performance programme prior to the Olympic Games in Rio.
Now, UK Sport CEO Liz Nicholl tells Eurosport UK that should Varnish succeed in being classified as having been an employee of British Cycling, rather than being considered a contractor as supported athletes have been treated, it could set a damaging precedent for all Olympic athletes.
"There are implications and they are quite significant," Nicholl said.
"If it is decided it's an employment scenario, there are other costs that will be incurred - National Insurance, tax, pensions and so on - and managed within a fixed budget."
Varnish was highly critical of the British Cycling coaches after the country failed to qualify a spot in the women's team sprint for the Rio Olympic Games. Soon after she made the comments at the 2016 UCI Track World Championships, she was dismissed from the programme.
She reported coach Shane Sutton for using sexist and discriminatory language toward her, a claim that was supported by several other athletes. Sutton resigned amid the controversy, which resulted in a full, independent investigation into the culture of British Cycling's high performance programme.
Varnish is not after the money, a source told the Times earlier this month. "She's frustrated that neither UK Sport nor British Cycling have changed the grey situation that athletes still remain in," the source said. "Athletes still have no real rights, no pensions, no grievance and whistleblower procedures, and no course of action, outside of civil action. There are some really deep-rooted issues which she's passionate about."
As a contractor, Varnish would have less recourse to sue for wrongful dismissal. If she can convince the court that she was effectively an employee, she could be owed the full legal obligation of her contract. It would also raise the costs of supporting every athlete in the country.
Currently, Athlete Performance Awards are paid to athletes as grants rather than a salary. If they become employees, the sports federations would have to pay national insurance and pension costs, too.
"I don't think it's a debate we need to have," Nicholl said. "The principle of athletes feeling as well supported as employees is the fundamental point here, and that's what the duty of care work we are doing - and focusing on - should address."