The performance of sports managers is a constant subject of discussion both in the media and amongst fans, with many holding strong views over whether an individual is properly performing in their role.
Recently, there has been great debate over the performance of various football managers, including Jose Mourinho, after his departure from Chelsea following their run of disappointing results, and in recent weeks Louis van Gaal of Manchester United.1 Similarly, the English rugby team’s underwhelming performance in the Rugby World Cup prompted a whole host of questions about Stuart Lancaster’s future prior to his decision to step down.2
While passions run deep in these cases, poor performance by managers also raises some interesting questions about what legal obligations clubs have in respect of dismissing an underperforming manager and – perhaps more importantly – whether these can ever realistically be followed where that poor performance is having an immediate and ongoing effect on the club’s results.
CAPABILITY UNDER THE EMPLOYMENT RIGHTS ACT 1996
Managers of professional sports teams are usually employees, and are therefore entitled to various employment rights.
This includes the right not to be unfairly dismissed.3 Sections 98(1) and (2) of the Employment Rights Act 1996 (the “Act”) provide that there are five potentially fair reasons for an employer to dismiss an employee.
One of these reasons is capability, which includes a person’s competence to perform the job they have been employed to do. Therefore, if someone is unable to perform their role to the required standard this may be a fair reason for terminating their employment. For this reason, dismissals of poorly performing employees are usually by reason of capability.
However, in certain circumstances aspects of poor performance may also overlap with misconduct, for instance if a manager failed to follow reasonable instructions from the club or failed to attend training sessions. In this case, the club would consider dismissing the employee for misconduct, another potentially fair reason under the Act, rather than capability. In addition, where the manager’s poor performance is precipitated by, or has resulted in, a complete breakdown in the relationship between them and the players or the club, the club may be able to argue that this breakdown is sufficient reason to justify their dismissal independent of any poor performance.4
However, the Act provides that whether a poor performance dismissal for one of the five reasons is fair or unfair depends on the particular circumstances of the case and on whether the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the particular employee.
In cases relating to capability, an employer will usually only be considered to have acted reasonably if it can be shown that:
These further considered below. As will be clear, the process a club will be required to follow in order to prove that it acted fairly and reasonably can be lengthy and onerous. For this reason, a club will inevitably want to consider whether there are alternatives ways of terminating the manager’s employment.
Firstly, in respect of making sure the employee is aware of the standard required of them, employees in very senior roles are expected to be more aware than most of what is required of them and to be capable of judging for themselves when something falls below the required standard.
Therefore a professional sports club would probably be entitled to assume that its manager was generally aware of the level of performance expected of them. However, any particular requirements, such as specific targets for results, should be clearly set out so the manager is aware of them.
The standard required of a manager could encompass not only technical aspects of the role, but also more subjective aspects such as their attitude or ability to interact with players, colleagues or clients. Again, a club would probably not be expected to have specifically drawn this to the manager’s attention, as it should go without saying that this is an important part of their role.
Secondly, where an employee is not meeting the standards required by their employer, case law has established that they would generally be expected to take the following steps (which are also often contained in a company’s own policies and procedures):
Finally, if an employer has taken the appropriate steps but the employee’s performance has still not improved to the required standard, then it would need to follow a proper disciplinary process prior to terminating their employment. The standard process is set out in the ACAS Code of Practice on Disciplinary and Grievance Procedures,5 and requires:
As will be evident from the above, following the appropriate procedures in respect of underperformance can be a time-consuming process. This may be time that a professional club can ill afford to spend, given the detrimental impact that an underperforming manager can have on the success of the club as a whole.
This means that inevitably clubs faced with underperforming managers will want to consider whether there is another potentially fair reason for which they could dismiss the manager (e.g. misconduct or “some other substantial reason”, as referred to above).
Dismissals for these alternative reasons have the advantage that the only procedural steps the club would be required to go through are those set out in the ACAS Code of Practice on Disciplinary and Grievance Procedures (as above), rather than the lengthier process of performance management required in capability dismissals. However a club would need to be able to show some substance to dismissals for these reasons, which cannot simply be used as labels to avoid a performance management process. Thus if an employment tribunal thought misconduct was being used by a club as a smokescreen and was not the real reason the manager was dismissed, this may make the dismissal unfair.
Alternatively a club may consider that the most commercial solution is to simply dismiss the manager and negotiate an exit settlement. This is likely to be the most commonly used route in practice, given the bureaucracy involved in following proper procedures and the relatively low level of damages that the manager would be able to recover in a claim for unfair dismissal.
The maximum compensation an employee can receive for unfair dismissal is currently the lesser of 52 weeks’ gross pay6 or £78,335.7 Where a manager’s poor performance is having a detrimental financial impact on a club, the compensation the manager would get for unfair dismissal will probably be insignificant in comparison to this sum. However, the club would also have to consider the provisions of the manager’s contract in relation to notice, which could make their dismissal more expensive, especially where the dismissal comes early in the manager’s employment and there is a significant period left to run on their contract.
As set out above, an underperforming manager can raise a number of difficult issues for a club, not least how to balance their legal obligations to treat that manager fairly against the commercial impact that poor performance may be having. When faced with this situation a club should consider its options including: