Trust will be key in Keegan v Newcastle

Football fans have been amazed by the recent high-profile employment conflict between Kevin Keegan and Newcastle United, which resulted in failed late-night discussions at St James’ Park to convince Keegan not to walk out on his job.

While negotiations continue in private, allegedly to avoid legal proceedings, the fans are left wondering whether Keegan will sue for constructive dismissal.

If Keegan does sue he will have to ­establish a fundamental breach of ­contract. In practice he will have to ­identify the contractual term, which may be express or implied, that he alleges has been broken. He will need to establish the evidential basis of his claim and satisfy the court that the facts as proven are sufficient in law to amount to a repudiatory/fundamental breach of contract.

This is essentially a question of fact and degree and it will be a difficult issue for Keegan’s advisers to assess, as the answer often turns on matters of impression or the context in which the events take place.

Keegan is asserting that he had no option but to resign because, among other issues, his wishes in the transfer market had been ignored. Players were signed without his approval, while others, such as Joey Barton and Michael Owen, were offered to other clubs behind his back.

Keegan is asserting that the implied term in his employment contract of ­‘mutual trust and confidence’ had been fundamentally breached. Much will turn on whether Keegan understood who was responsible for transfer policy at Newcastle and whether he had acknowledged the roles of the club’s executive director of ­football Dennis Wise and executive ­director and vice-president Tony Jimenez.

Unless the breach is significant and either goes to the root of Keegan’s contract or shows that Newcastle no longer ­intended to be bound by one or more of the essential terms of the contract, it will fall short of a constructive dismissal.

One can therefore speculate that this is why Newcastle made it clear before ­Keegan’s final resignation that it had not sacked him and did not want him to resign. Clearly these are not the classic actions of an employer seeking to force an employee to resign.

Keegan may well use the legal doctrine of ‘the last straw’ to argue he resigned in response to a series of breaches of contract or a course of conduct by Wise and Jimenez, which taken cumulatively amount to a breach of trust and ­confidence. The employment law test is whether, viewed objectively, the course of conduct showed that Newcastle had demonstrated an intention to no longer be bound by the contract of employment. In this context, the ‘last straw’ can bring to life earlier breaches of contract that may otherwise have been waived by Keegan.

To succeed in establishing constructive dismissal, Keegan must then be able to show that he resigned in response to the breach. However, would Keegan sue the club he loves for constructive dismissal?

Keegan is helped by the very nature of the implied term not to undermine trust and confidence. The nature is such that every breach of it can be said to go to the root of the contract and thus will be ­repudiatory/fundamental. However, if Keegan agreed to the boardroom setup and operated willingly within that setup for a number of months, he will struggle to argue successfully that the club fundamentally breached the implied term of mutual trust and confidence because it did not sign the players he wanted or sold or offered to sell players to balance the books. Newcastle United is a business, after all.

If this case proceeds to a full hearing, the arguments concerning the extent of a football manager’s role will be hotly contested.