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Underperforming managers: Give them extra time or send them for an early bath?

11 May 2010

As the football season draws to a close, West Ham have sacked their manager and the future of several others looks precarious. Employment specialist and partner Richard Santy considers how to avoid employment law making an ugly mess of the beautiful game.

After less than two years in the job, Gianfanco Zola’s contract with West Ham has been terminated. Even though Zola had previously signed a new four year contract with the club it was no secret that the new owners, David Sullivan and David Gold, were unimpressed with his performance.

This is a narrative which employment lawyers know well and which applies across sectors: a business is sold to new owners who clash with its existing management and inevitably the ‘old guard’ get shown the door. It may be a universal story, but what happens when this unfolds in the unique environment of football? 

On the one hand, a football manager who has a contract of employment with their club is an employee like any other and has the same legal rights, for example, not to be unfairly dismissed, as an employee in any other walk of life.

On the other hand, a football manager operates in a totally different environment from the usual workplace. Their performance (or lack of it) is acutely visible and there is nowhere to hide if things are not going well.

Timescales can be very short; a reasonable employer might be expected to give an underperforming employee several months to turn things around and would be careful to follow a fair procedure. In football a manager could find themselves dismissed without ceremony after only a few lost games.  As Jim Weir discovered when he was sacked following Montrose FC’s first loss of the season, time is of the essence when the window of opportunity is only a season long.

Although the term of mutual trust and confidence plays a significant role in the normal employment relationship, in football confidence is vitally important.

A successful manager who has the confidence of the club and its fans can be a talisman, drawing the best performances out of players and creating the virtuous circle of self-belief translated into results and ultimately financial success.

Conversely, where belief in a manager’s capabilities starts to ebb away, negativity – these days spread widely via electronic media – can be a self-fulfilling prophecy, with the individual very quickly becoming a Jonah figure.

Given the likelihood that a club which is seeking to dismiss its manager is also quite likely to be facing financial difficulties how can it do so in the most cost effective way and avoid paying out a large sum in compensation?

Any manager could bring a breach of contract claim if their employment was terminated other than in accordance with its terms but an employee who has been employed for at least 12 months can also bring an unfair dismissal claim in the employment tribunal within three months of their dismissal.

This is a statutory claim under the Employment Rights Act 1996 and any compensatory award is capped in most cases, currently at a maximum £65,300.

This means that such claims are not really worthwhile for higher earners who can recover uncapped damages for wrongful dismissal (breach of contract) in the ordinary courts. In addition, such claims can be brought up to six years from the date of termination. 

The best potential protection that a club has is the contract of employment itself. While it is too late to change terms and conditions at the end of the relationship, time spent at the recruitment stage carefully drafting and negotiating terms that may be helpful in the future is likely to be a good investment.

For example:

Mitigation will be an important element in a club’s defence of any breach of contract claim. However, an ex-manager may try to argue that it is impossible for him to mitigate his loss by obtaining another similar position because his reputation has been damaged.

Clubs need to be careful how they handle any publicity around the dismissal to avoid arguments that the ex-manager’s prospects in the job market have been damaged.

Kevin Keegan tried to claim £16.5m in ‘stigma damages’ from Newcastle United on the basis he was tainted by his association with the club and would not be able to get further employment in football until he retired. Although he was ultimately unsuccessful, other managers could try and bring similar claims in the future.

As the prospects for the global economy continue to look bleak we are likely to see more football clubs struggling. Given the often symbiotic relationship between financial health and sporting success clubs need to be prepared for the worst by making sure they have the necessary legal tools available should they need them. 

At the recruitment stage clubs should be careful to build in the contractual flexibility they may need to call on in the future should they need to dismiss the manager. Making sure that terms are clear and certain at the outset will help avoid unnecessary litigation.

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Richard Santy

Partner
T: 03700 86 4139
I: +44 (0)121 625 4139
E: richard.santy@shoosmiths.co.uk