Premier League and Football League clubs will be more vulnerable to unfair dismissal claims from sacked managers and released players from next year after changes to employment law. Under the Employment Rights Act (ERA), which comes into effect on 1 January, employees will gain protection from unfair dismissal after six months rather than two years of service.
In another significant change, the cap on compensation awards at employment tribunals of £118,223 will be removed, giving dismissed managers and players a far greater incentive to bring a claim. A combination of the requirement for two years’ service and modest payouts have protected clubs from unfair dismissal claims, but that could change from next year.
The League Managers Association and Professional Footballers’ Association have discussed the potential benefits of the ERA for their members in meetings with the leagues and clubs but are waiting to assess its impact. Antonio Conte brought an unfair dismissal case against Chelsea on an apparent point of principle after he was sacked in 2018. After winning his claim he was awarded £85,000 by the London employment tribunal, on top of the £26.6m the club had paid the Italian and his coaching staff in compensation as per their contracts.
Joe McMorrow, a partner in the employment law practice at Pinsent Masons, said the ERA would probably have major consequences for football clubs that many may not have foreseen. “Historically, nearly all disputed manager or player exits, other than transfers, have been resolved through arbitration or settlement agreements, rather than through an employment tribunal,” he said. “This is where we may see a fundamental shift.”
McMorrow believes the removal of the cap could lead to claims from players released at the end of their contracts. Under the terms of the ERA employers must give a fair reason and follow a fair process to dismiss staff, even at the end of a fixed-term contract. “If you’re a player released at the end of a four-year contract it’s still a dismissal, so the process needs to be seen to be fair,” he said.
“In the current Premier League standard contract, it says that when your contract ends the club will pay you an amount equivalent to the maximum award for unfair dismissal, which is around £120,000. That clause is going to need to change but the removal of the cap gives the players much more leverage.”
