Employment Law in Sport

Question 1

What are the key characteristics of an employment relationship?

Answer 1

. Almost always written e.g. PL managers’ contracts must be
. Contains certain clauses negotiated between representatives of the players, clubs and the NGB
. Contains mimimum level of protection for all parties
. Rules ensuring players conform to rules of the NGB and ISF

Question 2

How has the employment relationship changed over the years and what is the situation now?

Answer 2

. Commercialisation has led to clarification of sporting relationships, frequently through litigation

. Dominant position of NGBs like the Football Association challenged by successful clubs and latterly ‘player power’-power shift

. Sometimes English courts willing to take a pragmatic, sports-orientated interpretation of the law; Manchester City v Royle [2005], NB vs Liverpool

. NGBs have tried to reclaim control of their sports in part through the creation of specialist tribunals

Question 3

What is the main source of employment rights?

Answer 3

Employment Rights Act 1996

- Centrally these employment rights cover the formation, performance and termination of the contract

Question 4

What are the performance contractual terms in football?

Answer 4

. Both clubs and players are under several express obligations. e.g.

Club to pay wages during injury periods, provide medical and insurance cover

. The Player agrees to play to the best of his ability in all football matches,
. To observe the Rules of the Club at all times,
. To keep and maintain a high standard of physical fitness and agrees not to indulge in any sport, activity or practice that might endanger such fitness e.g. drink driving or skiing

Question 5

When is an interpretation of contract terms an issue?

Answer 5

When there is a breach or termination of contract

Question 6

When is a contract breached?

Answer 6

Contract breached when one of the parties fails to comply with terms & can lead to compensation claims

Question 7

What is an example of the courts taking a sports-friendly approach when interpreting a contract?

Answer 7

Manchester City v Royle [2005].

Question 8

What is the background of the Manchester City v Royle [2005] case?

Answer 8

. Parties in dispute over compensation after City sacked manager Royle
. Term in contract stated that if contract terminated before end of duration then they would pay compenation
. Compensation would be eitther 12 months salary if in PL and 6 months if in the Championship

Question 9

What was the claim in the City vs Royle case 2005?

Answer 9

. 19th May-Club relegated
. 21st May sacked
. Royle argued he was entitled to PL compensation as they were still on shareholder member of PL
. Club argued it had been relegated sporting wise and was therefore entitled to paying Championship compensation

Question 10

What was the judgement in the City vs Royle case 2005?

Answer 10

. Court of appeal said the test of contract interpretation to be applied was that of ‘the reasonable person with a knowledge of football’
. Football person would conclude they were not a PL club after last game of the season
. Compensation payable was Championship rate

Question 11

What are two forms of contract breach?

Answer 11

Repudiatory breach and constructive dismissal

Question 12

What is repudiatory breach? and example case

Answer 12

A fundamental breach of a contract that a breach so fundamental that it permits the distressed party to terminate performance of the contract, in addition to entitling that party to sue for damages/compensation
e.g. Mutu v Chelsea FC Ltd CAS 2008

Question 13

What is constructive dismissal? and example

Answer 13

Where an employer has committed a serious breach of contract, entitling the employee to resign in response to the employer’s conduct. Dismissal as a result of not being able to carry out bob originally agreed.

Keegan v Newcastle United FC Ltd [2009]

Question 14

What is the background to Mutu vs Chelsea 2008?

Answer 14

. Mutu tested positive for cocaine in two occasions during 2004 (July & Oct)

. Chelsea terminated employment contract in 28th Oct 2004- Mutu appealed but FAPLAC had stated he committed a breach of contract without just cause
. Mutu signed for Italian Club, Livorno, in 29th Jan 2005 & 2 days later for Juventus.

Question 15

What was the award of the FAPL AC and DRC for Mutu case?

Answer 15

. FIFA DRC awarded 17,173 990 Euro compensation to Chelsea-based on transfer fee, agent fees, replacement costs of new player and deterrent of behaviour
. Chelsea applied DRC for payment of compensation by Livorno and Juventus (to be held jointly liable) & awarded the decision after Mutu could not pay back amount
. Juventus & Livorno appealed to CAS and the decision of FIFA DRC overturned as they had not induced the player

Question 16

What is the background to Keegan v Newcastle United FC Ltd [2009]?

Answer 16

. Keegan took job in 2008 understanding he would have last say on transfers
. Club signed South American player against Keegan’s consent
. Keegan resigned after disagreement over who had final say

Question 17

What was the decision of the Keegan v Newcastle United FC Ltd [2009]?

Answer 17

. Newcastle admitted signing was for commercial reasons as a favour for 2 S American agents
. Public statement saying Keegan was in charge of transfers was just public relations to please fans
. Claimant found entitled to being treated as constructively dismissed

Question 18

What are the relevant Articles of FIFA Regulations on Status and Transfers of Players in terms of contract termination?

Answer 18

. Art. 13: “A contract between a professional and a club may only be
terminated upon expiry of the term of the contract or by mutual agreement.”

. Art. 16:”A contract cannot be unilaterally terminated during the course of a
season.”

. Art. 14: Termination with Just Cause: “A contract may be terminated
by either party without consequences of any kind (either payment of
compensation or imposition of sporting sanctions) where there is just cause.”e.g overdue payables (2months), permanent injury

Question 19

Why were FIFA Regulations on Status and Transfers of Players brought in?

Answer 19

Following the Bosman ruling, FIFA wanted to provide stability to contractual relationships to prevent excessive player power

Question 20

What is an example of a sporting just cause written in FIFA Regulations on Status and Transfers of Players?

Answer 20

“An established professional who has, in the course
of the season, appeared in fewer than ten per cent of the official matches in which his club has been involved may terminate his contract prematurely on the ground of sporting just cause…”

Question 21

What are the relevant Articles of FIFA Regulations on Status and Transfers of Players in terms of calculating compensation?

Answer 21

Art. 17.1 - Compensation shall be calculated with due consideration for; the law of the country concerned, the specificity of sport, and any other objective criteria

Question 22

What is the objective criteria for calculating compensation?

Answer 22

. The remuneration and other benefits due to the player under the existing contract and/or the new contract
. The time remaining on the existing contract up to a maximum of five years
. The fees and expenses paid or incurred by the former club (amortised over the term of the contract)
. Whether the contractual breach falls within a protected period

Question 23

When was the Shakhtar Donetsk vs Matuzalem case?

Answer 23

2008

Question 24

What is the background of the Shakhtar Donetsk vs Matuzalem case?

Answer 24

In July 2004, signed 5 year contract with Shakhtar Donetsk
. 3 years in he unilaterally terminated contract without due cause
. June 2007, signed 3 year contract with Real Zaragoza SAD

Question 25

What was the award in the Shakhtar Donetsk vs Matuzalem case?

Answer 25

Shakhtar applied to FIFA DRC relying on Art. 17 of FIFA regs wanting release clause figure of 25m E

DRC awarded around 6M Euros

CAS:

Positive interest criteria - Future contract

Awarded 11,9M Euro

Player and Zaragoza jointly liable

Question 26

What is the concept of an agent?

Answer 26

Concept: a person or a rights owner appoints a third party or representative to enter into agreements on behalf of the principal

Exclusive or non exclusive and territorial

Question 27

What was the original FIFA regulations on agents?

Answer 27

. Exam entry to hold a license
. only 11% pass rate.
. yet only 30% of negotiations held by registered agents

Question 28

Who can be an agent in the current regulations on Working with Intermediaries 2015?

Answer 28

Any natural or legal person (i.e. including a company) can act as an Intermediary and represent football players or clubs in contract or transfer negotiations;

Question 29

What must National Associations do with intermerdiaries to allow them to make transactions?

Answer 29

. National Associations must register Intermediaries involved in transactions (Regulation 3)
. Intermediary has an “impeccable reputation
. no conflict of interest
. no criminal record
. Shall abide by rules

Question 30

What are the relevant regulations about Intermediary remuneration in the FIFA Regulations on Working with Intermediaries 2015?

Answer 30

Agency Contracts can be for any period so long as they state the term of the Agreement (Regulation 5)

Payments to Intermediaries must still be disclosed to the relevant association (Regulation 6)-usually 5-10%of client earnings

FIFA recommends that there be a 3% cap on remuneration paid to Intermediaries (their remuneration not to exceed 3% of the player’s basic gross income) (Regulation 7)-rarely followed

Question 31

What is the regulation on intermediaries with under 18 clients?

Answer 31

Intermediaries may not receive any remuneration at all from services provided in relation to a Player who is under the age of 18, but may enter into an agreement with them when under the age of 18, so long as the player’s legal guardians sign the contract in accordance with applicable national law (Regulations 5 and 7)

Question 32

What are the regulations concerned with sanction authorisation on intermediaries?

Answer 32

. National Associations will be responsible for imposing any sanctions on parties within their jurisdiction that violate the Regulations (Regulation 9)

. National Associations are required to implement and enforce the FIFA Regulations, but are entitled to go beyond the “minimum standards” in them (Regulation 1)