Employment Law Changes and Professional Sport

by Tim Copplestone, partner, Clarke Willmott

The raft of employment law changes being introduced by the government will have a major effect in the arena of professional sport.

Unfair dismissal protection from the outset

One of the headline employment law changes to have been announced is the introduction of unfair dismissal protection as a statutory right from day one, rather than the employee having to complete two years of continuous employment service to qualify for this level of protection.

Professional sports playing contracts are however predominantly for fixed term periods reflecting the seasons, with the fixed term period normally being a season or multiple seasons, each spanning the period 1st July to 30th June in professional football and rugby. Similarly elite football managers and coaches are also predominantly engaged on lengthy fixed terms, securing their commitment to the team for multiple seasons.

If terminated earlier outside the scope of the contract terms a player or manager’s primary (and normally much higher value) leverage is often a claim for wrongful dismissal, i.e. dismissal in breach of contract rather than unfair dismissal.
That said, there are publicly reported instances of high-profile managers separately pursuing their unfair dismissal compensatory award in addition to their multi-million-pound wrongful dismissal claim.

Professional sport approach in practice

It is important to note that the non-renewal of a fixed term contract when it reaches its expiry date still amounts to a dismissal in the law, and an employer club is strictly obliged to show that they have a fair reason and that they have followed a fair procedure. A fair reason could potentially be ‘some other substantial reason’, alongside the other prescribed fair reasons (such as misconduct, capability, etc).

This is a good opportunity to highlight the approach of professional sport in practice, and by example the specificity of professional football, with the playing contract acknowledging the special characteristics of this type of employment.

In the standard form Premier League football playing contract a specific formula is agreed at the outset with the player if their playing contract is not renewed on its agreed expiry date on 30th June. This triggers an additional top up payment for the month of July, allowing the player to unlock an extra payment.

The relevant Premier League standard playing contract clause provides:

“If by the expiry of this contract the Club has not made to the Player an offer of re-engagement on terms at least as favourable to the Player as those applicable over the last twelve months of this contract (or the length of this contract if shorter) then subject to clauses 19.1 and 19.3 the Player shall continue to receive from his Club (as a separate payment representing compensation as more particularly referred to in the Code of Practice) a payment equal to his weekly basic wage (at the average amount of his weekly wage over the preceding 12 months of this contract or the whole of this contract if shorter) for a period of one month from the expiry of this contract or until the Player signs for another club, whichever period is the shorter, provided that where the Player signs for another club within that period of one month at a lower basic wage than such average then such payment shall in addition include a sum equal to the shortfall in such basic wage for the remainder of such period”

The player will still therefore receive a top-up if they accept an offer from a new club if there is a shortfall from the level of pay that they previously enjoyed. The standard form Premier League playing contract also caps this payment so that the maximum amount payable to the player is double the maximum sum which an Employment Tribunal can award as a compensatory award for unfair dismissal.
The future introduction of unfair dismissal as a day one right, especially given the statutory cap of an unfair dismissal compensatory award of currently £115,115, will not impact managers and players to the same degree as club senior executives, coaches, support staff, and workers within a club’s wider staff resources.

The change (with a date in force to be confirmed) will oblige employers to establish a fair dismissal from the outset, and individuals could challenge a swift termination where the employer has not covered off a compliant dismissal within the probationary period. It has been reported that the probation period may be up to a maximum of six or nine months under the new law, but the legislation regulations fine tuning the period and detail are yet to be issued and finalised.

Because professional players secure lengthy fixed term contracts, the standard playing contract terms already provide agreed narrow sport specific circumstances where an employer is entitled to terminate early. For example, in the Premiership rugby standard form playing contract, a player who has signed with a new club must still pass their pre-contract medical examination no later than 28 days before their new club start date.

If the player does not pass the pre-contract medical examination to the reasonable satisfaction of the employer club’s medical expert and if the player is still unable to play rugby for the club within nine weeks of their start date due to the same medical condition, then the club could terminate the contract early at the end of the nine-week period.
The forthcoming new employment law changes will also double the time limit to present a claim in the Employment Tribunal from three months to six months. Employment contract disputes within professional football for players and managers are determined by the relevant Arbitration Panel forum, such as the Premier League Managers Arbitration Tribunal or the Premier League Tribunal.

Sport staff beyond the players and managers

Beyond unfair dismissal workers will also benefit from enhanced day one rights to parental leave and sick pay, alongside the ban on one-sided flexibility in zero-hours contracts that may impact on temporary stadium and matchday staff depending on their terms of engagement.
The changes will also provide that workers have the right to a contract that reflects the number of hours they regularly work based on a 12-week reference period, plus reasonable notice of any change in shifts or working time plus compensation for any shifts that are suddenly cancelled or curtailed short.

The government also intend to expand protections for those with ‘worker’ status short of ‘employee’ status, where only employees had formerly enjoyed the most enhanced level of protection, and this will be firmed up in future consultation – the government acknowledging that this will take time.

The government has only published its ‘Next Steps’ and no timeframe has been finalised. The status of elite athletes has been challenged unsuccessfully in the past, but nonetheless the proposed changes will widen the reach and number of other individuals who fall within the enhanced protection due to their worker status for a professional sport employer.