(c) Paul Blank

The Managerial Merry-go-round: from Moyes to Van Gaal and everyone in-between… The employment law implications

Dr Mark Butler

Introduction

As the premier league season drew to an end on 11 May 2014 the inevitable question was who would be the next manager to be sacked. The season had already seen a number of high profile dismissals, including Paulo Di Canio from Sunderland (less than six months after being appointed), Martin Jol from Fulham (2 ½ years into his reign), Andre Villas-Boas from Tottenham Hotspur (17 months after taking charge), Malky Mackay from Cardiff City (2 ½ years in charge), Michael Laudrup from Swansea City (less than 12 months in charge) and Chris Hughton from Norwich City (just under two years in charge). However, the dismissal that attracted most media interest was that of David Moyes (formerly) of Manchester United, who received his marching orders on 22nd April 2014, only 10 months in to a reported six year contract.

Following completion of the league season we have already witnessed two further managers moving on, with Pepe Mel leaving West Bromwich Albion by mutual consent, five months into his 18 month contract, and Tim Sherwood having his contract terminated by Tottenham (five months in); however, this list may grow longer with managers such as Paul Lambert of Aston Villa (appointed 2 June 2012), Sam Allardyce of West Ham (appointed 1 June 2011) and Alan Pardew of Newcastle United (appointed 9 December 2010) amongst the favourites to be the next to be sacked in what is fast becoming a managerial merry-go-round. What this short piece intends to do is to consider the employment law implications of the sackings of such football managers.

Unfair dismissal

Although unfair dismissal is well known the detail on how it operates is often missed. In order to qualify for thIS right the worker has to satisfy a number of qualifying hurdles, including showing that there was a dismissal. Incidentally, termination by mutual consent, such as that between Pepe Mel and WBA is not a dismissal, and therefore any suggestion of unfair dismissal in his case would inevitably fail.

The hurdle that provides the greatest difficulty, at least in relation to football managers, is the need to have been continuously employed with the dismissing employer for more than two years. As one can see from the list of dismissed managers the likes of Moyes, Villa-Boas and Di Canio are afforded no protection from unfair dismissal (subject to falling within an automatic unfair dismissal category, which none of them appear to). Managers such as Martin Jol, and in the event of being sacked, Lambert (should he survive two more weeks in post), Allardyce and Pardew would be afforded the protection. So what would qualifying for this right mean for these managers?

This would place a burden on the football clubs to do two things: (1) dismiss for a reason that is considered substantively fair, and (2) dismiss using a fair procedure.

Football is a results business. So should a club not achieve the results it desires then it is inevitable that the man in charge will have their competencies and abilities to manage the club to achieve such desired results being questioned. Fortunately for football chairmen the Employment Rights Act 1996 contains a list of potentially fair reasons for dismissal, which includes capability. Capability is defined with reference to skill and aptitude. Football manager dismissals can clearly fall within this reason, with it being their skill and aptitude to take a club forward or achieve results being called in to question.

In determining whether dismissing for capability grounds is fair or not the employment tribunal makes use of the ‘band of reasonable responses’ test. This test is not the tribunal asking whether they themselves would dismiss the manager in such circumstances, but it is a test that appreciates that different employers will act in different ways in the same circumstances, and put simply, it asks whether such action was a reasonable response by the employer. If the tribunal concludes that no employer anywhere would dismiss the manager in those circumstances then the dismissal will be deemed unfair; however, the problem for football managers is that dismissals for poor performance or for not maintaining a high level of performance have almost become the norm over recent years, and so it would, in my opinion, prove difficult to convince a tribunal that dismissing in such circumstances did not fall within this band of reasonable responses. Most unfair dismissal claims would thus fail.

There is also a procedural aspect to the dismissal. So long as the employing club follows a reasonable procedure, which includes meetings and warnings, and offering a right of appeal, then the tribunal will be satisfied of fairness in this respect.

In the (unlikely) event of convincing a tribunal that the dismissal was unfair the tribunal would be faced with two remedial options: reinstatement or compensation.

Reinstatement will often be ruled out, since the views of the parties would be taken into account as to whether this would work. In circumstances where the chairman is convinced that the manager was not right for the club, and where the manager has had his competences questioned then there is likely to be a breakdown in the relationship such that returning to their position would be difficult. This would leave the dismissed manager with a claim for compensation.

Compensation is made up of three parts:

  1. Basic award;
  2. Compensatory award; and
  3. Additional award (not hugely relevant in these circumstances).

The basic award is calculated with reference to the manager’s age, the length of time he worked there and his weekly wage. Pardew’s position probably highlights the insignificance of such an award available to a football manger. As Pardew is 53 years old he would be afforded 1.5 weeks wage (capped at £464 per week) for each of his completed years’ service (currently he has completed 3 full years’ service). His basic award thus, if he was dismissed before December 2014 would be £2,088.

In terms of the compensatory award, which provides compensation for loss of earnings and other financial losses caused by the dismissal this is capped at £76,574 or 12 months’s wages, whichever is the lowest (so obviously the £76,574).

A total sum of £78,662 (at most) to compensate for the loss of a multi-million pound job in an unfair manner offers little in terms of proper protection for football managers and certainly would not deter chairmen from utilising the extreme power of dismissal.

 Breach of implied term of Trust and Confidence

There is an interesting issue in relation to whether a football manager would be able to seek compensation for a breach of the implied term of trust and confidence whilst they were employed, through actions by their chairmen which undermine their position. This can certainly be seen in relation to Mackay, where it surfaced that Vincent Tan, Cardiff City’s Chairman issued Mackay with a dossier of his managerial failings, which included questioning his work on signings, results on the pitch and conservative playing style, which ended with an ultimatum of resigning or being sacked.  With Moyes, reports suggested that Manchester United had started interviewing potential candidates to replace him before any such decision to remove from post had been made. In both circumstances it is easy to consider that their positions may have been undermined and thus creates a potential claim.

However, in both cases, Johnson v Unisys [2001] UKHL 13 would preclude such a claim being successful. This case introduced a principle whereby this implied term could not be used where the breach itself formed part of the dismissal process, as Parliament had intended that such dismissal compensation be dealt with under the unfair dismissal regime itself (as outlined above). As both situations have intrinsic links to their ultimate departure then this is not an avenue open to them.

Breach of contract

There is potential for greater protection offered to football managers through breach of contract claims; however, this will wholly be dependent on the individual’s contract itself.

To succeed in these claims the manager will have to show that their contract has been breached in some way, which will entitle them to compensation which reflects the losses they have suffered as a result; in other words what would have been received had the contract been ended properly in accordance with their contract. This would thus be dependent on the existence of any break clauses or notice periods built into the contract.

The initial step to succeed is that the manager would have to show that dismissing them was done in breach of their contract, which will raise the question of whether the dismissal was justified or unjustified in the circumstances. Justifying a dismissal would need the football club to show that ‘…the conduct [by the manager] is such as to show the servant to have disregarded the essential conditions of the contract of service.’ [Laws v. London Chronicle (Indicator Newspapers) Ltd [1959 1 WLR 698]]. This will clearly be fact dependent, and will be down to what is being considered as a fundamental condition of the contract. For example, at Manchester United, it may have been impressed upon David Moyes, or may have been a central express term of his contract, that Champions League qualification was fundamentally important, and thus a failure to qualify was such a breach that justified dismissal. Comparing this to Tim Sherwood, such a suggestion is much more difficult given that he appears to have out-performed his predecessors, and so dismissal based on performance would be difficult to justify.

Determining justification of the dismissal is vitally important as this will determine whether the manager has such a contractual claim. If the dismissal is justified, obviously no claim will exist; however, where it is not justified then attention must be given to how the contract could have been ended in accordance with the contract itself, as compensation will reflect this period.

For example, if it was not a fundamental term of Moyes’s contract to gain Champions League qualification, and his dismissal was found not to be justified in the circumstances, and also he did not have any break clauses or notice period clauses in his contract, it would be possible for Moyes to claim compensation for the loss of wages that he would have received over remaining five years and two months of his contract, as the contract could only have been ended lawfully on expiration.

This again can be compared to Sherwood’s position. Even though the removal of Sherwood arguably could not be a justified dismissal based on performance, his contract had a break clause within it which could be invoked at the end of the season. therefore his contract was concluded in accordance with his contract, and no breach of contract claim can be advanced (so long as it was invoked in line with its own terms, such as any agreed payoff).

Inserting such means of ending a contract prematurely or defining the key requirements of the managerial role at any particular club is thus exceptionally important should a football club wish to avoid huge breach of contract claims being brought against them. Newcastle United found this out to their detriment when Kevin Keegan constructively dismissed himself having had his position undermined in respect of transfer signings.

So Mr Van Gaal and Manchester United may wish to carefully consider their contractual position before either one of them signs it as this is the key battleground for protections and compensation should a project fail…

Mark Butler (@m_butler1) is a Lecturer in Law at Lancaster University Law School, a fully qualified non-practising barrister, and the co-author of European Employment Laws.  His research interests are centred on UK employment law and EU Labour law, with a particular emphasis on employee rights.  He is currently conducting research in the area of age discrimination, viewing the protections afforded to workers through comparative analysis.

You can find out more about Mark’s research at http://www.lancaster.ac.uk/fass/law/profiles/mark-butler

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