The covid-19 pandemic has had an adverse financial impact across all industries including the footballing world. Even big football clubs with varied revenue streams have been facing intense financial pressure. To cope with such a situation, clubs have tried to reduce their wage bill by negotiating deferrals in payments to players and staff, a percentage cut in weekly wages and in some cases even temporary employee suspension. In order to provide a framework to such negotiations FIFA announced certain guidelines on April 7th 2020. While FIFA states that its recommendations are not binding and must be in concordance with the domestic employment law, there is an apparent conflict between employment laws in England and FIFA’s guidelines.
The crucial issue of conflict is with regards to expiration of existing player contracts. The pandemic has caused a halt in play and the football season is set to finish no earlier than the end of August. This means that the termination date in player contracts which earlier used to be 30th June no longer coincides with the actual end of the season. FIFA has proposed a simplistic answer to resolve this conflict by suggesting that the contractual intention of the parties was to fulfil their respective obligations till the end of the season and therefore, player contracts must be extended until such date.
However, such a position is untenable under English Law, where player contracts are drafted to end obligations on a specific date rather than the occurrence of a specific event. In such a scenario, the only way out is for the club and player to mutually agree on an extension in the contract.
There may also be scenarios however, where the club and player may not agree with proposed variations in the contract such as a wage cut or a payment deferral. While English Law is clear on the matter and states that unilateral changes in the contract amount to a breach, FIFA is more accommodating of such unilateral variations. It lists 5 factors which may be considered in order to decide a dispute between the club and the player- a) existence of a genuine attempt by the club to reach an agreement with the player b) the economic situation of the club c) proportionality of any unilateral variation being introduced d) the income of the player after any such variation e)whether players are being treated equally or not. Thus, there is no certain position with regard to the legality of unilateral contractual variations and the attitude of FIFA suggests it looks more favourably upon clubs trying to maintain contractual stability as opposed to players challenging unilateral changes in the contract. Under Articles 12bis, 14 and 14 bis of the Regulations on the Status and Transfer of Players (RSTP), the players have an option for taking legal action due to breaches in contracts. It is unclear how FIFA will balance its guidelines against the RSTP in future disputes referred to its Dispute Resolution Chamber (DRC).
There is also a unique situation which may arise when a player decides to terminate his contract in light of a wage cut imposed by a club in UK and decides to move to a foreign club. In such a scenario, the parent club may sue the foreign club under Article 17 of the RSTP for “inducing a breach of contract”. Disputes like these will be decided by FIFA’s DRC guided by FIFA’s recommendations as opposed to being settled by private arbitration under the domestic employment laws of UK. This means that the dispute may well be won depending upon where it gets adjudicated. This is because FIFA is most likely to favour the parent club as it tries to maintain the squad composition of teams whereas the employment laws of UK will unequivocally hold the unilateral variation in the contract unlawful. This means that the player is significantly curtailed in his efforts to move to a foreign club before the end of the season. This is regardless of the validity of the termination of the previous contract as possible sanctions under Article 17 of the RSTP will most likely deter foreign clubs from signing a player in a contractual dispute with his parent club.
It is clear that FIFA’s guidelines are in conflict with the employment laws of England and have created more confusion with regard to the legality of unilaterally imposed wage cuts and deferrals. They also unfairly infringe upon the protection given to players under FIFA’s own laws enshrined under the RSTP.
Dhananjay Dhonchak
NALSAR University