A landmark change to employment law is set to create a significant challenge for Premier League and Football League clubs, making it far more difficult to sack managers and release players. The upcoming amendment to the Employment Rights Act (ERA), effective from January next year, will grant individuals greater protection against unfair dismissal after just six months of employment, a drastic reduction from the current two-year threshold.
Enhanced Protections and Uncapped Claims
Under the new regulations, the existing cap on compensation claims, which currently stands at £118,223, will be entirely removed. This shift provides axed employees with substantially more scope to pursue claims, potentially leading to higher financial liabilities for clubs. The Professional Footballers’ Association has already engaged in discussions with leagues and clubs regarding the potential benefits of the ERA, highlighting its far-reaching implications.
Impact on Football Clubs
Football clubs, known for their high turnover of personnel, could be among the hardest hit by this law change. For instance, Nottingham Forest have already cycled through four managers this season alone, with figures like Ange Postecoglou and Sean Dyche being dismissed within months or even weeks. Such frequent upheaval will become increasingly challenging to manage once the new employee rights take effect.
Joe McMorrow, a partner in the employment law practice at Pinsent Masons, emphasised to the Guardian that the ERA will have major consequences for football clubs. He stated, “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. This is where we may see a fundamental shift.”
Historical Precedents and Future Risks
McMorrow added, “It will be much harder for clubs to avoid unfair dismissal rights being pursued through a tribunal. The government has talked about the ERA as a once-in-a-generation change to employment rights, and it could have big implications for football.” A notable precedent includes Antonio Conte, who won an unfair dismissal case against Chelsea after being sacked in 2018, just months after winning the FA Cup. The Italian was awarded £85,000 by the London employment tribunal, in addition to the £26.6 million compensation paid to him and his coaching staff as per their contracts.
Broader Implications for Players
Beyond managers, the removal of the compensation cap could also lead to claims from players released at the end of their contracts. Under the ERA, employers must provide a fair reason and follow a fair process to dismiss staff, even at the conclusion of a fixed-term contract. Consequently, players whose contracts expire may still retain certain employment rights, potentially increasing pressure on clubs to enhance severance pay, which currently stands at one month for those released without a new club.
This legal overhaul represents a significant shift in the employment landscape for football, promising to reshape how clubs handle personnel changes and manage financial risks associated with dismissals.
