21 July 2003
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28 October 2013
The average employee is relatively free to move between employers. Footballers are not so lucky, but in the past decade, their salaries have risen to a point where their clubs might reasonably argue that this lack of freedom is adequately compensated.
Often clubs do not want to let a star player leave their employment, despite the player's clear desire to do so. Philippe Mexes, the gifted French defender who has been the target of a number of English Premiership clubs, is currently involved in a contractual dispute with his club Auxerre to allow him to leave.
Mexes signed a five-year contract with Auxerre in June 2000. In December 2002 he agreed to a one-year extension of his contract, which had been requested by the club. However, the day after the new contract was signed, the club realised that under new FIFA rules, Mexes could still leave the club in 2003 because he would have played for three years as a professional. The club refused to recognise the new terms because they claimed that the contract was signed without the supervision of club officials and Mexes' adviser added clauses to the contract. In April 2003, the club took its case to the French Football Federation which rejected the claim. The matter has now gone before the French Olympic Committee and it is estimated that it could take Mexes a further six months before he can extract himself from his contract with Auxerre.
In order to be allowed to earn their livings, footballers must be registered with their governing body by their club before they can take part in any recognised competitions. When a player wants to transfer to another club, not only do they need an offer of employment from the new club, but they must also have their registration transferred to that club.
Under transfer rules drawn up by the owners of the clubs, players historically never had the right to be automatically registered with a new club upon leaving their previous club. Registration by a new club could occur only after a transfer fee was agreed and paid from the player's new
club to his previous club. The purpose behind this was that clubs which had invested in developing and training players should be compensated if the player chose to leave and go to another club. However, over time, the transfer fee came to represent only the market value for the player and bore no relation to the actual cost of training or developing the player.
The Eastham case
The transfer system was first challenged successfully exactly 40 years ago by former Newcastle and England player George Eastham. He argued that it was an unreasonable restraint of trade. The outcome of the Eastham case meant that a club's ability to retain a player's registration indefinitely was removed, but a club was still entitled to seek a transfer fee, even if the previous contract had expired.
The Bosman case
The post-Eastham transfer system was then challenged successfully before the European
Court of Justice in the 1995 Bosman case. The court held that where an EU national wanted to transfer to another club at the end of their contract, the club he was leaving could not demand a transfer fee in consideration for transferring the player's registration. The court considered this restraint to be disproportionate to the aim of compensating clubs for developing and training players and could not be objectively justified.
Following the Bosman ruling, the European Commission demanded the revision of European football transfer systems to ensure compliance with Bosman. After five years of negotiation between the European Commission and football's governing bodies, a new system was introduced last year.
The new system is generally regarded as a political compromise and lacking legal robustness. It provides that players can only transfer between clubs during two transfer periods - January and June/July. A player cannot transfer between clubs at any other time and players are allowed to transfer only once per season. These new rules are ripe for legal challenge and international players' association FIFPro has indicated that it might do so when the right case comes along.
The new system has caused some practical problems for footballers. Take the example of the football player who is dismissed by his club, for whatever reason, and is subsequently offered a new contract by a different club outside the transfer window. This effectively means that a player is unable to earn a living in the six months between the transfer windows. This is clearly not only an unreasonable restraint of trade, but also a breach of the freedom of movement under Article 39 of the EC Treaty when players want to move between clubs within the EU.
Trust and confidence
There is a well-established principle in every contract of employment that requires parties involved not to conduct themselves in a manner calculated to seriously damage the relationship of trust and confidence that should exist between an employer and an employee. This term is fundamental to the employment relationship and any breach of it is likely to be a repudiatory breach of the contract of employment. If an employer breaches this implied term and is in repudiatory breach of the employment contract, an employee can resign and claim constructive dismissal.
In the recent press coverage of the Beckham transfer, there appeared unconfirmed reports that Manchester United, and in particular its manager Sir Alex Ferguson, had decided to sell Beckham and did not want him to return to Old Trafford. It now appears that the club not only held talks with both Real Madrid and Barcelona, but also either sought to replace Beckham or at least to purchase players with the anticipated proceeds from his sale. At the same time, it was also reported that Beckham's spokespeople, and in particular his father, said that Beckham did not want to leave Old Trafford and wanted to remain at the club until his contract came to an end in 2005. What the real positions of the respective parties were, we will never know - well not until the next autobiography.
If it is true that Manchester United, by its conduct, made it clear that Beckham was no longer welcome at the club and that it had no intention of continuing to employ him, it is arguable that it breached the implied term of trust and confidence. This could have allowed Beckham to resign and claim constructive dismissal, which in turn could have had disastrous consequences for the football club. If Beckham successfully claimed constructive dismissal, the club would no longer be his employer and, therefore, would not be entitled to claim the transfer fee from Real Madrid, or whichever club Beckham decided to join.
Sean Dempsey is a senior assistant in the employment and incentives department at Lewis Silkin