Moyes signed a 6-year fixed-term manager contract last July. Within a fixed-term contract regime, unless there is a clear notice or agreed termination payment clause, the employee is entitled to payment of his salary and benefits for the remaining period of his contract, albeit subject to the principles of mitigation depending on the wording of the contract. This is best exemplified by last year’s example of Henning Berg walking away from Blackburn Rovers with the entire value of the remainder of his contract, namely £2.25 million, after only 57-days in charge. However, when Kevin Keegan resigned as Newcastle manager he was unsuccessful in a claim for £20 million as there was a clear contractual termination clause setting out an agreed sum of £2 million to be paid in such a situation.
For Moyes the contractual situation appears clear-cut. According to reports in The Times his contract contains a 12-month termination payment clause, which apparently equates to a pay-off of £4.5 million. The nuance to this case is, though, reports of a contractual performance “break-clause” , which entitled United to terminate if Champions League qualification was not secured and limited compensation to one-year only in that circumstance. That Moyes was sacked shortly after that threshold was not reached leads a degree of credence to such a clause existing in practice. If so, such a performance related clause may be followed by other clubs in the future, thereby limiting compensation payable to failing managers.
Whilst the above covers contractual payments, an area which is often overlooked in practice within the world of football is the statutory employment regime. In a controversial first-instance Liverpool Employment Tribunal decision in 2012, Liverpool’s former Director of Football Strategy, Damian Comolli, successfully argued for a top-up to his agreed contractual termination payment by way of an additional sum of £72,730 for statutory compensation for unfair dismissal.
In most football-related cases establishing liability for unfair dismissal will be easy; football clubs simply do not follow statutory employment procedures in practice. Moyes was reportedly informed of his dismissal at 8am on the first working day after the Easter Bank Holiday weekend. In the circumstances, it would be fanciful to suggest that a proper performance management or a “trust and confidence” investigation had taken place prior to his dismissal.
For many Premier League managers the additional statutory compensation may be peanuts in relative terms but, given Comolli’s success, it would be negligent for legal advisers not to raise the prospect of a statutory top-up with the former manager or to contract out of liability for the same on behalf of a club when a compromise agreement is reached by the parties.
In practice, in most manager dismissal cases, a quick agreed compromise is reached. In the cases which do not, the League Managers’ Association often steps in to represent the ousted manager. If all else fails, proceedings may be brought before the Premier League Managers’ Arbitration Tribunal. That is, in general, a process held in private before one or three independent arbitrators, who usually come from a legal background. That process can be relatively quick, being concluded within several months. Given Moyes’ apparently clear contractual termination payment entitlement and the relatively small sum arising under statute, it is not anticipated that he or United will go anywhere near an arbitration panel in this situation.
The Sports Group at Littleton Chambers, which is recognised by the leading legal directories, has advised and represented managers and/or clubs in the majority of the high-profile manager terminations over recent years. Members of Littleton have advised and appeared before the League Managers’ Arbitration Tribunal and Employment Tribunal, including in some of the cases mentioned in this article. For more information contact tim@littletonchambers.co.uk or follow @Littleton 1 and the Head of the Sports Law Group @JohnMehrzadLaw
