Should an employee quit as soon as they consider there to be a breach of the employment contract?

When advising employees on their various options following an alleged breach of contract by an employer, one issue which always arises is at what stage the employee should formally resign, if taking this course of action. There is always the concern that, through not resigning immediately, it could be held that an employee has affirmed any breach of conduct. Potentially, this could be the case even where it should be clear that they did not intend for the contract to continue.

The Employment Appeal Tribunal have held however in the recent case of Chindove v Morrisons Supermarkets that delay in resigning in itself cannot amount to an affirmation of a breach of contract. The Employment Tribunal had held in the first instance that due to the fact that the last act of mistreatment (this being the failure of an HR manager to investigate a grievance) had occurred 6 weeks prior to resignation, the employee had affirmed the breach of contract. On appeal however, it was held that the matter of time is not to be taken in isolation. What is more important is whether the employee has demonstrated through their conduct that they have made a choice that they wish for the contract to continue.

This is good news for employees who are simply considering their options following a breach of contract, or attempting to negotiate a settlement with their employers, as often happens in sport. It is not uncommon for negotiations of a settlement to take several weeks, particularly in these days of foreign owners and busy schedules. The news that it is possible to undertake this process without running the risk of being accused of affirming a breach is well received therefore. As confirmed in the case, it is the conduct which is important. Therefore, if it can be shown that a participant has been replaced (as is easily demonstrated where a new manager or coach have been appointed) and that the individual has been engaged in attempting to agree a settlement, it will not be held that the breach which lead to the resignation has been affirmed, simply by the fact that it occurred some time before any resignation, following a breakdown in negotiations.

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Who’s the self-employed independent contractor in the black?

It is likely that many a football fan will have joked about issuing a formal complaint to a referee’s employer following dubious performances throughout the season. However, the question of whether match officials are actually employees of their respective Football Associations is not as straight forward as you would first think, as has recently been confirmed in the case of Conroy v Scottish Football Association.

In the case, which was considered by an Employment Appeal Tribunal, Mr Conroy, a top level Scottish referee, issued claims against the Scottish Football Association for unfair dismissal, age discrimination and holiday pay. The Scottish FA however argued that Mr Conroy was self-employed and was therefore not entitled to issue such claims. An employment tribunal had previously found that he was not an ‘employee’ for the purposes of the Employment Rights Act 1996. However, it had held that he was an ‘employee’ for the purposes of the Equality Act 2010 and a ‘worker’ for the purposes of the Working Time Regulations 1998. Mr Conroy appealed against this decision. The Appeal Tribunal have dismissed this appeal however and have upheld the original decision. Accordingly, Mr Conroy is unable to pursue his clam for unfair dismissal. However, he is still able to pursue the claims for age discrimination and holiday pay.

In making this finding, the fact that Mr Conroy purchased his own equipment, such as flags and whistles, was taken into consideration. Additionally, attention was drawn to the fact that the Scottish Football Association were not obliged to offer any fixtures to the match official and he would not be disciplined for withdrawing from fixtures. Although the FA provided private medical care and insurance cover, they did not pay any sick pay and Mr Conroy was responsible for his own tax. Finally, it was noted that Mr Conroy had a full time job, although it was noted that he was paid £213,000 each season for officiating at matches.

The result of this finding means that, although Mr Conroy still has several options still available to him, he will be unable to pursue a potentially lucrative claim for unfair dismissal. Although on first viewing it would be easy to say that the question of whether a referee is employed by a Football Association is a simple one, as is often the case with employment law issues a lot depends on the facts specific to the case.

So the next time you feel the urge to hurl abuse at a match official for making what is perceived to be an incorrect decision, have some sympathy for them. They are choosing to give up a lot of time without actually becoming employees and benefiting from the receiving of employment rights in return. And those flags aren’t cheap either, even if you are being paid £213,000 a season.

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End of the football season = start of the real work?

With the football season having finished it would be easy to suggest that for those working behind the scenes a long period of holiday is now upon us. However, this could not be further from the truth, particularly in respect of player transfers. Although the forthcoming World Cup in Brazil has provided a certain element of distraction for the press, we are already seeing daily rumours about potential big name transfers appearing across all the usual outlets. But what actually happens for the lawyers and agents involved in these rumours and transfers?

Although the transfer window doesn’t officially open until 1 July, clubs and agents will already be negotiating behind the scenes. This is in spite of the fact that most players and managers will have taken a very short post-season break. These negotiations include agreeing contract extensions (particularly where the original contract contained an option to do so at the end of the season), attempting to renegotiate terms (mainly in respect of lengths and salary) and even attempting to find ways of terminating a contract or gaining leverage to help with any negotiations (Happy Birthday to any footballers reading this, by the way….)

In a lot of cases players will have agreed with their agents during the season that they would like to move clubs. Should this be the case and a player is still under contract, FA and FIFA regulations state that discussions are not permitted to take place without the permission of the employer. Despite the fact that the FA sees relatively few high profile referrals under its Rule K arbitration process for ‘illegal approaches’ (more commonly known as tapping up), there can be no doubt that this process takes place relatively frequently. Unfortunately however money talks, therefore if this takes place and it leads to a transfer then clubs are usually satisfied that they have been amply compensated. In addition, it could even be said that this process is accepted as part and parcel of the game.

If a club are interested in a player, they then have to make a formal approach to the employer. Any agreed transfer will need to be confirmed by The FA once the transfer window opens. This follows normal negotiations between clubs and then subsequently between the club and player, to be followed by a formal contract.

You often read in the press about smaller clubs being dissatisfied with the ‘poaching’ of their young players by bigger organisations. Where a player under the age of 24 has been offered a new contract, which is rejected in favour of signing for a different club, rules set out that compensation is payable. Should a figure not be agreed between the clubs the matter is referred to arbitration which is run by the Professional Football Compensation Committee. This body hears a range of evidence in respect of the player’s history and the background to the transfer and will set a figure. Frequently this is staged to include additional sums dependent upon future performances.

Of course all of this work has not even mentioned pre-season training, which commences sooner and sooner each year for players. When you take into consideration the fact that agents and lawyers are probably already working hard behind the scenes, alongside the fact that players will soon be reporting back for pre-season training (should they not be involved in the world cup), then it is fair to say that, although the playing season has finished, football never really takes a break.

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Richard called upon yet again to provide expert legal opinion

Following the recent announcement that Norwich City, Fulham and Cardiff City have instructed lawyers to challenge a decision made by the Premier League to only fine Sunderland AFC following the fielding of an ineligible player, FrontRow Legal’s principal Richard Cramer was once again on hand to provide expert legal opinion to the national press.

Although the Premier League have stated they feel that a points deduction for Sunderland is unlikely following this process, the challenge does still have the potential to alter relegation from the 2013/2014 FA Premier League, therefore the subject has been picked up by the majority of the major news outlets. For Richard’s interview with BBC Radio 5 Live please visit the link below, the interview starts at 1 hour 37 minutes:

http://www.bbc.co.uk/programmes/b042lgs9

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Yet more media coverage for FrontRow Legal Principal Richard Cramer

Following the recent announcement that an independent QC had upheld the prospective Leeds United Football Club owner Massimo Cellino’s appeal against the decision of The Football League to reject his takeover of the Club, Richard was again on hand to provide an expert opinion to the press.

To watch Richard’s interview with Radio Yorkshire please follow this link: http://radioyorkshire.co.uk/?post_type=articles&p=554

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Employment law changes taking effect from 6 April 2014

Back in December we commented on what were, at the time, forthcoming changes within the area of employment law (http://www.frontrowlegal.com/blogs/blog/forthcoming-employment-law-changes/)

With several of these amendments coming into force on 6 April 2014 we thought it a good time to pick out two areas which are likely to be of interest to those seeking to make a claim against their employers.

ACAS Early Conciliation

It has now been confirmed that any potential claimants must first refer their claim to the Advisory, Conciliation and Arbitration Service (ACAS), before they are able to submit an ET1 claim form to the employment tribunals. This service will be brought in from 6 April 2014 and will become mandatory from 5 May 2014.

Once ACAS have been notified of a claim they will contact the potential claimant to obtain further details from them about the matter. Importantly, the potential claimant is not required to proceed with the ACAS service and can simply confirm that they do not require their assistance. If this is confirmed it will not prohibit them from subsequently proceeding with the case through the employment tribunals.

Where a potential claimant indicates that they do wish to utilise the ACAS service, a Conciliator will contact the employer and attempt to reach a solution between both parties. One of the main reasons why the current Pre-Claim Conciliation Service has not proved successful is due to the fact that the limitation period, this being the time within which a claim must be issued, is only 3 months from the date of dismissal in employment cases. Under the new scheme, ACAS will contact potential claimants within 2 days of initially being notified of a claim. They will then have 1 calendar month from receipt to promote a settlement which can be extended by up to 14 days where there is a reasonable prospect of settlement and both parties agree. The time limit to submit a claim to the employment tribunals is paused from the time that ACAS are first contacted and will re-commence once ACAS have confirmed that the early conciliation procedure has been concluded, either through settlement or the fact that the proposed claimant/employer does not wish to continue with the service.

One interesting aspect however is the fact that the Conciliators are not able to make judgments about whether tribunal claims have any merit. There will therefore be situations where ACAS are obliged to continue with the conciliation process, even if they do not consider the claim to be valid. Additionally, Conciliators can only convey to an employer what the potential claimant has told them. It will therefore be difficult to establish if any potential claims exist where this information is unclear or incomplete.

It will be interesting to see how these changes affect the numbers of potential claims which are settled without the need to involve the employment tribunals. There is no doubt that there will be an increase, however it remains to be seen whether people simply refer their potential claims to ACAS with no intention of actually using the service, in order to be able to continue through the standard process.

Increased figures

One other change which will be of interest is that the maximum amount for a week’s gross pay is being increased from £450 to £464, when calculating amounts that can be claimed by an employee. This uplift is likely to apply to a large number of claimants, in that this calculation is used to calculate the basic award and will therefore provide a larger pay-out for those who are on annual salaries over £23,400, whereas previously their claim would have been restricted. Additionally, the maximum compensatory award is being increased from £74,200 to £76,574, this award being compensation for actual loss of income. It could however be said that this is likely to only affect those on large salaries, or those who are likely to be unable to find work for a significant period of time.

 

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Leeds United: Richard asked to provide expert opinion to the press

The past few weeks have been busier than usual for FrontRow Legal’s principal Richard Cramer, with various national and local journalists, including those from the BBC and ITV, requesting interviews to discuss the recent events surrounding the proposed takeover of Leeds United FC by Massimo Cellino.

On 18 March 2014, the Italian courts fined the proposed new owner following a finding of guilt in relation to tax evasion. Richard was asked to comment on what the likely outcome would be following this, particularly in light of the fact that The Football League were in the process of assessing whether the Italian passed their owners and directors test.

When The Football League subsequently announced that the finding would lead to Cellino failing the test, Richard was again called upon to provide expert opinion on what this now means for Leeds United.

For Richard’s detailed commentary on this issue please see the national press.

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FrontRow Legal Principal Richard Cramer meets Jimmy Montgomery

With the invention of wifi the life of a sports lawyer does not always involve being chained to a desk or phone, as was evidenced by Richard’s visit to The Stadium of Light on Saturday to watch Sunderland’s defeat at home to Hull City.

Any Leeds United fans will want to look away now however, as Richard was clearly witnessed chatting amicably with Jimmy Montgomery, the former goalkeeper famously known for that double save during the 1973 FA Cup Final: http://www.youtube.com/watch?v=PZmFoo4payA

Any Sunderland fans may also want to avoid the image below. Although, to be perfectly honest, the reasoning behind some of the questionable tactics during the game might become clearer if you choose not to……

 

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The CAS ad hoc division: Verdicts delivered at a gold medal winning speed

The start of the 22nd Olympic Winter Games in Russia will see people from all corners of the globe descend upon Sochi in anticipation of sporting glory. Amongst this mix of elite athletes, coaches, spectators and media will be members of the Court of Arbitration for Sport who have set up an ad hoc division of the Court for the duration of the Games. The Court of Arbitration for Sport (‘CAS’) is an international quasi-judicial body which was established to settle disputes related to sport. Rule 61 of the Olympic charter specifically states that all disputes in connection with the Olympic Games can only be submitted to this body. Due to the necessity for prompt decisions, which might have an immediate effect on the running of the Olympics, temporary Courts are set up within Olympic host cities. These temporary Courts have the same powers as the normal Courts, however decisions are delivered at an expedited rate and a binding verdict will be delivered within 24 hours.

An example of this in operation was the first decision to come out of the Sochi ad hoc Court concerning the Austrian halfpipe freestyle skier Daniela Bauer. The skier filed an application on 2 February 2014 for CAS to order the Austrian ski governing body to place her on the Olympic team for this event. Her case was that she had met the International Ski Federation qualification requirements and that a place had been promised to her. Having received the application on 2 February, the case was heard on 3 February and the decision to reject the application was delivered immediately. Although the result was probably not what the athlete would have wanted, the speed at which CAS operates during Olympic competitions will have provided some comfort. Although the work of CAS often goes unnoticed, it is as much a lynchpin of the effectiveness of the organisational process as the person who orders blanks for the starter’s pistol. Without this body being in place, disputes would drag on and undoubtedly dramatically affect the competition. With CAS being set up precisely to deliver fast and free verdicts, this is not allowed not happen.

Having said that, there is one area which CAS does not get involved in which relates to on-field decisions. As has frequently been demonstrated, the ad hoc division of CAS has consistently refused to become involved in decisions relating to these sorts of decisions. Examples of which are an appeal brought by a French boxer in 1996 for punching below the belt and, more recently, an appeal brought by a Mexican walker in 2000 for disqualification. In doing so, CAS has stated that the most competent person to deal with such decisions is the referee or official. It is perhaps for this reason that CAS has managed to stay out of the limelight, despite providing an excellent service which has been relied upon by hundreds of Olympic athletes over the years.

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Financial Fair Play Rules: A brief explanation

With the transfer window closing on 31 January, we thought it an appropriate opportunity to provide a very brief explanation of UEFA’s Financial Fair Play Rules. With Manchester United recently breaking their club record transfer fee for the purchase of Juan Mata, it would be easy to say that clubs are laughing in the face of these rules. However, as will hopefully be explained below, this is not necessarily the case. Although a full explanation of the requirements is far beyond the scope of this blog, a brief summary of the main points should hopefully provide you with a basic understanding of what are an extremely complex set of rules. For the purposes of brevity, we will concentrate on how the rules will affect Premiership clubs. Please note that although the rules set out financial limits in Euros these have been converted to Sterling.

In a nutshell, clubs are now required to comply with UEFA’s Financial Fair Play Rules. Non-compliance may result in a sanction ranging from a warning all the way up to a large fine and expulsion from UEFA competitions, although we will discuss more on this later. The intention behind these rules is to ensure that football clubs are run like a business, and that any club reporting substantial regular financial losses should be punished. However, as has been widely reported in the press, the matter is not as straightforward as it might initially seem. There are various factors which need to be taken into consideration when looking at whether a club is deemed to have reported a loss in accordance with the rules. Additionally, the rules themselves cover much more than just the requirement to break-even, including paying players on time and keeping up-to-date with taxes. However, it is the break-even requirement which is likely to pose the most concern to premiership clubs, therefore we will concentrate on this.

After an easing in period, when wages for players signed before 1 June 2010 were excluded from financial records and permitted losses were set relatively high, we are now in the middle of the first ‘proper’ accounting period, which runs over 3 years. UEFA felt it unfair to assess a club’s break-even results over 1 year therefore they look at a 3 year average. Over this 3 year period clubs are required to demonstrate that they have complied with the rules. However, as will be discussed below this doesn’t actually mean that they have to show that they haven’t made a financial loss.

The first slightly confusing area relates to the fact that clubs are allowed a permitted level of loss (yes, you did read that correctly). Although this is set at £4.1 million per single monitoring period, this permitted loss is greatly increased (up to £24.7 million) if the owner converts this loss to equity. In other words, if a club are due to breach the threshold, then the owner is forced to inject up to £20.6 million of their own cash into the club. It goes without saying that this is something that will greatly benefit the wealthiest owners, who will almost certainly be looking to take full advantage of this exception, at least in the short-term.

Additionally, there are various expenses which are completely excluded from the reports. For instance, infrastructure development, youth development and community development costs are all excluded. UEFA has stated that the reason for this is that it does not want the rules to affect development in the game. Although this is likely to be one outcome, the wealthiest clubs have stated that they are hoping to be able to exclude up to £10 million using these exceptions.

As is evidenced with the recent transfer of Juan Mata from Chelsea to their rivals Manchester United, a transfer that, arguably, would not have taken place if Chelsea did not have one eye on the financial fair play requirements, clubs are certainly conscious of adhering to the rules, or at least appearing to. What is more telling however are the recent accounts for Manchester City from Deloitte for 2012/2013. These show a huge 31% increase in commercial income, from £121.1 million to £158.2 million, in a season where the only major deal was a kit deal worth an estimated £12 million. This deal was the largest in this year by some margin. To put this income stream into context, in 2009/2010 the clubs entire commercial income was less than £55 million. The result of this huge increase is that the club are most likely to be within touching distance of complying with the break-even rules. However, this is before any assessment of a transaction from a ‘related part’ is investigated by UEFA.

Under this provision, any transaction with a company or body connected to the clubs owners can be investigated and the value decreased if it is found to be at an inflated value. As I am sure you can imagine, investigations into these transactions are likely to be extremely complicated and difficult to prove. In 2011/2012 Manchester City reported that they received £12.8 million from the owners for ‘Intellectual Property and Knowhow’, it goes without saying that this will probably not be the last one-off items in clubs accounts for large amounts.

Having taken all of the above into consideration, it is clear to see that the argument as to the effectiveness of the Financial Fair Play Rules is still in its infancy. With so many loopholes it remains to be seen how much of a change the rules will have on how the game is run. Linked to this is the fact that we are yet to see what punishments UEFA will impose for breaches. If word coming out of the organisation is to be believed, then clubs will be excluded from European competitions for failing to comply. However, the jury is out on whether this threat will be followed up on. Additionally (and perhaps more importantly) in the background is the legal challenge to the laws themselves on the basis that they breach EU rules on competition and free movement. Although that is a blog for another day………

 

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