Termination of a football coach’s contract
1. Preamble
Within the sports industry, few, if any, jobs are as vulnerable as the job of the football coach/manager. A study conducted by RunRepeat in December 2020 showed that averagely coaches and managers for clubs in the top five leagues in Europe last between 35 and 69 matches before they are replaced. The same study shows that less than ten percent of the football coaches and managers leave after the end of the contract, while the rest are either sacked, terminate the contract for another job, or come to an agreement with the club to prematurely end the contract. The contractual position of a football coach has to a large degree been regulated by national law, until FIFA changed its regulations in 2021.
In a statement published 19th November 2020, FIFA announced that the FIFA Council are set to approve two sets of reforms that aim to strengthen the position of football coaches and female football players. Regarding the proposed reform on football coaches, FIFA President Gianni Infantino said that “coaches play a vital role in the game, but historically they have been left outside the football regulatory framework. We needed to plug this gap and recognise the key role they have.”
The proposed regulations were later endorsed by the FIFA Football Stakeholders Committee (FSC) and included in the 2021 version of the Regulations on the Status and Transfer of Players (RSTP).
2. The FIFA regulations on coaches and managers
Until 2021, RSTP did not have any provisions regulating the contractual position of a football coach or manager. The lack of specific regulations regulating the relationship between a football coach and a football club caused difficulties for sports lawyers and judicial bodies to establish which applicable law that should apply to s dispute between s coach and s club, and to foresee the outcome of such a dispute.
In the 2021 version of RSTP, a coach is defined as “an individual employed in a football-specific occupation by a professional club or association” whose “employment duties consist of one or more of the following: training and coaching players, selecting players for matches and competitions, making tactical choices during matches and competitions; and/or employment requires the holding of a coaching licence in accordance with a domestic or continental licensing regulation”.
As from 2021 professional football coaches’ contracts are regulated in RSTP annex 8. The annex regulates every contractual relationship between a coach/manager and a club or national association. The provisions in the annex do not as such regulate the contractual relationship between a coach and the club or national association the coach is employed by. However, the annex requires the national associations to include in its domestic regulations “appropriate means to protect contractual stability between coaches and clubs or associations, paying due respect to mandatory national law and collective bargaining agreements”. This wording is the same as RSTP’s scope as regulated in RSTP art. 1-3 litra b.
It is worth noting that all the provisions regulating the contractual positions of coaches and managers are subject to implementation of regulations and standard contracts by national associations, as well as national legislation, in particular national labour law. The contractual position of a football player, on the contrary, is partly regulated directly by RSTP, to the extent the relevant article is listed in RSTP art. 1-3 litra a, and partly subject to national implementation and legislation, if listed in RSTP art. 1-3 litra b. For example, a player will be protected by RSTP art. 12bis, as a club that fails to comply with its financial obligations towards a player will risk being sanctioned by FIFA. If a club fails to comply with its financial obligations towards a coach, however, a sanction is dependent on national implementation and legislation.
3. Termination of the contract
A football coach’s contract can be terminated by mutual consent, and in such a case the termination agreement would normally secure the coach a financial compensation. The extent of the financial compensation would depend on a number of factors, but the remaining time of the contract would normally be a crucial factor. National labour law, including Swiss law, could to some extent restrict the possibility for employees/coaches to waive their rights. Even termination clauses, that seek to predetermine the outcome of an early termination of a football coach’s contract, could be invalid due to national labour law. If a dispute following the early termination of a football coach is not regulated in e termination clause and cannot be settled in an agreement, the consequences of the termination will be regulated by the contract, national legislation and FIFA’s regulations.
The implementation of termination provisions in the RSTP annex 8 is possibly the most important measure to secure contractual stability, whilst also aiming to secure a balance in the contractual relationship between the coach and the club or national association. The termination provisions in annex 8 are with some minor exceptions, equal to the termination provisions for players, regulated in RSTP art. 13-18.
A clear starting point to the provisions on termination, annex 8 art. 3, is that the contract must be respected, a provision that is based on RSTP art. 13. According to RSTP annex 8 art. 4, a contract can only be terminated if there is just cause, conditions that of course corresponds with the provisions for terminating a football player’s contract, regulated in RSTP art. 14. Whether there is just cause will have to be considered in on a case-to-case basis.
3.1 Just cause
When considering whether a club or a coach will have just cause for terminating the contract, it is natural to look at how just cause is considered for players. RSTP’s termination provisions are based on a principle that the contract must be respected, which is stressed in the commentary edition of the RSTP:
“Respect of contract:
The Regulations aim to ensure that in the event of a club and a player choosing to enter into a contractual relationship, this contract will be honoured by both parties. A contract between a player and a club may therefore only be terminated on expiry of the contract or by mutual agreement. Unilateral termination of a contract without just cause, especially during the so-called protected period, is to be vehemently discouraged.”
Extensive jurisprudence from FIFA DRC and CAS show what is needed for a football player or a football club to be able to terminate the contract with just cause. This jurisprudence will be guiding when considering whether there is just cause for terminating a football coach’s contract.
Whether there is just cause, must be established on a case-to-case basis. All breaches of the contractual obligations do not give the counterparty just cause for termination. Even if the football club or the football coach fails to fulfil the contractual obligations, it might not give the other party the right to terminate the contract. The commentary edition of FIFA's transfer regulations seen in connection with extensive jurisprudence from FIFA decision-making bodies and CAS show that a contractual breach either must be material, persist for a long time or is cumulated with other violations over a certain period of time to justify termination with just cause[1].
Historically, there has been little guidance in RSTP with regards to what should be considered just cause. In June 2018, however, FIFA amended art. 14, aiming to indicate when just cause occurs, adding a second paragraph to art.14, defining abusive conduct as entitlement for termination for just cause:
“Any abusive conduct of a party aiming at forcing the counterparty to terminate or change the terms of the contract shall entitle the counterparty (a player or a club) to terminate the contract with just cause.”.
The new provision codified CAS jurisprudence, such as CAS 2015/A/4286, Plaku v Wroclawski Klub and CAS 2017/A/5465 Békéscsaba 1912 Futball v. George Koroudjiev where CAS concluded that the players had just cause when terminating their contracts, after they were dropped from the first team and forced to train alone. The abovementioned cases from CAS could be relevant for considering just cause in the contractual relationship between a coach and a club, e.g. if the coach is being downgraded to be a coach for other teams than the first team, or is given other tasks than stipulated in the contract.
RSTP’s provisions of just cause as a requirement for unilateral termination is based on the Swiss Code of Obligations art. 337. According to this code, termination due to just cause may only occur when one of the parties fail to fulfil its contractual obligations. In other words, the club will not have the possibility to unilaterally terminate the football coach’s contract due to the club’s financial problems. Such an approach has been confirmed by CAS in many cases, such as CAS 2016/A/4482 where the panel stated: “Administrational and financial difficulties within the Club cannot be invoked as an excuse for non-payment of a player. It is for the Club to find a way around these difficulties or to bring this forward to the player in an attempt to arrive at a compromise”. In accordance with the principle of pacta sunt servanda (agreements must be kept), a club that fails to fulfil its financial obligations towards the coach, due to the club’s financial difficulties, commits a breach of contract.
3.2. When the football coach terminates the contract
When a football coach unilaterally terminates the contract, the consequences will depend on whether the coach can establish that he or her had just cause for the termination. For the football coach to establish just cause, it must first be established that the club has breached its contractual obligations. If that is the case, the next consideration is whether the club’s breach of its contractual obligations is significant enough to establish just cause.
The club’s most important contractual obligation is to pay the football coach’s wages. In this respect, it must be stressed that reduced or non-payment of wages normally will constitute a breach of the club’s contractual obligations, but not necessarily represent a contractual breach that justifies a termination with just cause. Whether the missing payments are significant enough for a coach to terminate the contract with just cause must be considered on a case-to-case basis. Minor delays and even non-payments that are not substantial seen in relation with the total value of the contract will usually not give the coach just cause for termination. However, the football club’s violation of its contractual obligations might give the coach the right to terminate the contract with just cause if the breach can be considered material, persist for a long time or cumulated with other violations
In 2018 FIFA issued a new provision in RSTP art. 14bis, regarding late salary payments to players. The same wording is adopted in annex 8 art. 5 and regulates the contractual relationship between clubs and coaches. The first paragraph of the provision states in brief that if a club is more than two months late with salary payments, then the coach will be able to terminate the contract with just cause, provided he gives the club 15 days to pay outstanding wages.
3.3 When the football club terminates the contract
The club can, just as the coach, terminate the contract if it can establish just cause. A coach’s lack of success, which is by far the most common reason for the club’s unilateral termination of the contract, will not constitute just cause. Jurisprudence from FIFA DRC and CAS show however that clubs can establish just cause if players fail to report for training over a longer period, or if they breach football or sports regulations, such as Adrian Mutu who was sacked from Chelsea FC[2] after he tested positive for cocaine. Similarly, a coach who commits a serious breach of football or sports regulations, will risk having his or her contract terminated with just cause.
4. Calculation of compensation
If a contract has been unilaterally terminated by one of the parties without there being just cause, and if a party unilaterally terminates the contract where there is just cause, the party who has breached its obligations will be liable for damages pursuant to RSTP annex 8 art 6. It is worth noting that the article is applicable when a football club or a football coach has terminated a contract with just cause even though the wording of the provision clearly suggests that it only regulates the consequences of a termination without just cause.
Annex 8 art. 6 is based on the new wording of RSTP art. 17, which was amended in 2018. The article specifies the method of calculation of compensation following a unilateral termination. In short, if a coach is entitled to compensation, the compensation should match the coach’s financial loss as a result of the termination. If the coach has not signed a new contract following the termination, the compensation should equal the remaining value of the contract. If the coach has signed a new contract however, the value of the new contract should be deducted, leaving the coach with a mitigated compensation. In addition to the mitigated compensation the coach will in any case be entitled to an additional three months’ compensation. Further, if it can be established egregious circumstances, the coach could be entitled to up to another three months’ compensation. As the possibility to award up to an additional three months’ compensation if there are egregious circumstances is fairly new, there are no cases where CAS actually has awarded additionally compensation based on this provision, but in CAS/2020/A/6727, the CAS panel considered a claim for additional compensation based on egregious circumstances, and concluded that the player was not entitled to additional compensation as the player already had been fairly compensated for his damages.
Although the parties, as well as DRC and CAS, have some discretion with regards to calculating the compensation, the amended article makes it easier for coaches and clubs to foresee the consequences of terminating a contract without just cause and will likely also lead to more consistent jurisprudence at the CAS.
If the coach has terminated the contract without just cause, or if the club has terminated the contract with just cause, the club will be entitled to compensation. In such a situation compensation shall be calculated on the basis of the club’s financial loss, taking into consideration “the remaining remuneration and other benefits due to the coach under the prematurely terminated contract” and expenses incurred by the former club.
In accordance with annex 8 art. 7, which is based on RSTP art. 12bis para. 2, any club found to have delayed a due payment to a coach for more than 30 days without a prima facie contractual basis may be sanctioned with a warning, a reprimand or a fine, given that the coach has put the club in default by granting a deadline of at least ten days to comply with its financial obligations.
If a club or a coach fails to comply with a decision from a FIFA decision-making body that orders the party to pay an amount within 45 days from the date of the decision, annex 8 art. 8 states that the party that has failed to pay the amount may risk sporting sanctions. In practice, the coach risks being suspended from football activity for a period, the club may be excluded from one or more transfer windows, and the national association may have their development funding suspended.
5. Dispute resolution
Even before the implementation of annex 8 in RSTP in January 2021, the FIFA Players’ Status Committee (PSC) was competent the adjudicate employment-related disputes between a club or an association and a coach of an international dimension, subject to RSTP art. 22 and 23. These provisions have not been amended, and a dispute between a club or association and a coach can still be adjudicated by PSC if the dispute has an international dimension, i.e. where the coach is not a citizen of the country where he performs his or her coaching duties. According to FIFA's statutes art. 63, CAS is recognized as an appeal body for decisions made by FIFA's judicial bodies, which means that decisions from PSC can be appealed to CAS.
6. Closing
Until now, the contractual relationships between football coaches/managers and their football clubs have not been regulated by FIFA. With the new reform, football coaches/managers will also find themselves with better protection, as the new regulations aim to ensure contractual stability similar to the contractual stability provisions for football players. The reform for football coaches/managers will partly provide football coaches/managers with a minimum regulatory framework that clarifies the employment relationships with their clubs and national associations, and partly offer the football coaches/managers and their employers the possibility to have their disputes heard by FIFA’s decision-making bodies and the Court of Arbitration for Sport.
[1] See e.g. CAS 2013/A/3091
[2] CAS 2008/A/1644
