First written for and published by LawInSport. Click here to view the original article.
David Moyes was sacked after just 51 games as manager of Manchester United. Remarkably the last occasion United sacked their manager was 28-years previously, when Ron Atkinson was removed in 1986. Although Big Ron’s replacement, Alex Ferguson, did not win a trophy for 4 years (and was reportedly one loss away from being sacked himself in early 1990) what he then went on to achieve at the club is now the stuff of legend. This short article does not propose to hark back to United’s glory-days but rather, from a legal perspective, set out the options available to a manager like Moyes.
Moyes signed a 6-year fixed-term manager contract last July. Within a fixed-term contract regime, unless there is a clear and unambiguous notice clause or an agreed termination payment clause, the employee is entitled to payment of his salary and benefits for the remaining period of his contract, albeit subject to the principles of mitigation depending on the wording of the contract. This is best exemplified by Henning Berg walking away from Blackburn Rovers last year with the entire value of the remainder of his contract, namely £2.25 million, after only 57-days in charge. However, when Kevin Keegan resigned as Newcastle manager he was unsuccessful in a claim for £20 million as there was a clear contractual termination clause setting out an agreed sum of £2 million to be paid in such a situation.
For Moyes the contractual situation was apparently clear-cut. According to reports in The Times his contract contained a 12-month termination payment clause, which apparently equates to a pay-off of £4.5 million. The nuance to this case was, though, reports of a contractual performance “break-clause”, which entitled United to terminate if Champions League qualification was not secured and limited compensation to one-year only in that circumstance. That Moyes was sacked shortly after that threshold was not reached leads a degree of credence to such a clause having existed in practice. If so, such a performance related clause may be followed by other clubs in the future, thereby limiting compensation payable to failing managers.Such clauses may see the end of enormous compensation payments for managers instead reducing them to fixed amounts if key objectives, such as European qualification, winning a trophy or promotion, are not achieved or, say, the club is relegated.
Whilst the above covers contractual payments, an area which is often overlooked in practice within the world of football is the statutory employment regime. In a controversial first-instance Liverpool Employment Tribunal decision in 2012, Liverpool’s former Director of Football Strategy, Damian Comolli, successfully argued for a top-up to his agreed contractual termination payment by way of an additional sum of £72,730 for statutory compensation for unfair dismissal.
It is important to emphasise that it is a statutory prerequisite that the employee has two years’ continuous service to bring an unfair dismissal claim in the first place.This is, therefore, an action which was of no applicability for Moyes but will be for longer serving managers.
In most football-related cases establishing liability for unfair dismissal will be easy; football clubs simply do not follow statutory employment procedures in practice. Moyes was reportedly informed of his dismissal at 8am on the first working day after the Easter Bank Holiday weekend. In the circumstances, it would be fanciful to suggest that a proper performance management or a “trust and confidence” investigation had taken place prior to his dismissal.
For many Premier League managers the additional statutory compensation may be peanuts in relative terms but, given Comolli’s success, it would be negligent for legal advisers not to raise the prospect of a statutory top-up with the former manager or to contract out of liability for the same on behalf of a club when a compromise agreement is reached by the parties.
In practice, in most manager dismissal cases, a quick agreed compromise is reached. In the cases which do not, the League Managers’ Association often steps in to represent the ousted manager, as their effective union representation akin to the Professional Football Association for players. If all else fails, proceedings may be brought before the Managers’ Arbitration Tribunal under Section Y of the Premier League Handbook. That is, in general, a process held in private before three independent arbitrators, who usually come from a legal background. That process can be relatively quick, being concluded within months
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