LET'S TALK SPORTS LAW

[From the Editors’ Desk]

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We keep hearing about instances of Players getting injured and the Clubs terminating their contracts on that ground. Given the short term career of football players, this is extremely problematic especially in light of their livelihood being dependent on the same. Furthermore, Clubs slyly put injury/permanent incapacity clauses in the employment contracts which players tend to overlook while entering into such agreements; the Clubs later on cite these clauses to justify the unilateral termination. However, whether such justification stands the test of law needs to be understood.

In this article, we have addressed the following question:

Whether a Club is entitled to unilaterally terminate the employment contract by way of permanent injury/incapacity clauses – for example- can a club have a valid clause saying that it will be entitled to unilaterally terminate the contract if the player gets injured and is incapacitated for playing for a certain time.

Prior to analysing the above research question, let us have a look at how these injury clauses are generally drafted:

DRAFT INJURY CLAUSE COMMON IN FOOTBALL CONTRACTS:

“In the event that the Player suffers a Player Injury and/or the Player has been incapacitated from playing by reason of or resulting from a Player Injury for a period (consecutive or in the aggregate) N number of months, at any time during the Term of this Agreement, the Club shall be entitled to serve a notice upon the Player, terminating this Agreement.“

Please note that the above clause is NOT VALID. The following is an analysis explaining why :-

As per Article 13 of the FIFA Regulations on the Status and Transfer of Players (‘RSTP’), a contract between a professional and a club may only be terminated upon expiry of the term of the contract or by mutual agreement. However, unilateral termination is allowed by either party where there is a just cause. The RSTP does not provide or specify a comprehensive definition of ‘just cause’. Article 14bis (pertaining to ‘just cause for outstanding salaries’) serves as the only explicit indicator as to what could constitute ‘just cause’. Accordingly, the term has been primarily interpreted and understood through the plethora of decisions taken by the Dispute Resolution Chamber of the Football Tribunal (hereinafter, ‘DRC’) in respect to issues centred on ‘just cause’. Essentially, what constitutes ‘just cause’ depends upon the facts and circumstances of the case, which are varying in nature. If a contract is terminated without just cause, consequences, such as, inter alia, payment of compensation are applicable as per Article 17, RSTP. The corresponding provisions for maintaining contractual stability are provided under Article 19 of the AIFF RSTP, which are synonymous to the FIFA RSTP provisions as enumerated above.

Albeit FIFA DRC and CAS both follow the principle of pacta sunt servanda, which enshrines that the agreements must be respected by the parties in good faith [DRC Decision 07160251-e dated 29^th July 2016], the same has to be seen along with the application of the doctrine of ‘parity’, which basically explains that the clauses should not be disproportionate and should not infringe the principle of equal treatment [DRC Decision dated 13^th May 2005]. 

Protected Period

In furtherance of achieving the objective of maintaining contractual stability, FIFA had also propounded the concept of protected period. The Protected Period is the period of 3 entire seasons or 3 years, whichever comes first, following the entry into force, if such contract was concluded prior to the 28th birthday of the professional; or to a period of 2 entire seasons or 2 years, whichever comes first, following the entry into force of a contract, if such contract was concluded after the 28th birthday of the professional.

FIFA is of the opinion that unilateral termination of a contract without a justified reason, especially during the Protected Period, is to be vehemently discouraged. Therefore, especially during the protected period, unilateral termination is much more difficult and the threshold of justification is also higher.

Injury vis-à-vis just cause

The DRC is of the opinion that as a basic principle in labour law, if an employee is injured, this generally does not constitute just cause for the employer to unilaterally terminate the employment contract prematurely and therefore to cancel payment of the player’s salary. Eventually, the DRC will conclude that a premature and unilateral termination of an employment contract by a club is not justified.

In one of the cases before the DRC [DRC Decision dated 28^th July 2005], the club had unilaterally terminated the contract because the player suffered an injury – the player claimed that he suffered a serious knee injury during a match in the club’s service and that, as a result of this injury, the club informed him, in front of his team colleagues, that it would not count on him any longer. The player subsequently left the club and returned to his country. In order to recover from his injury, the player underwent surgery to his knee. The player was now claiming the payment of his salary for the entire contract period. The club unilaterally terminated its relevant employment contract. The DRC emphasized that this cannot and does not constitute just cause for a club to unilaterally terminate its employment contract with a player. It concluded that the player’s knee injury was in fact suffered in the club’s service and therefore the club was responsible for covering the costs, as well as the costs incurred during the rehabilitation process. As a result, the DRC decided that the club had terminated the contract without just cause.

In another case, the DRC clarified that such clauses are arbitrary, since they lead to an unacceptable result based on non-objective criteria, which entitles the club to unilaterally terminate the contract if the player was not able to play for a particular duration. The Chamber emphasized that the lack of objective criteria by the application of the relevant rule lead to an unjustified disadvantage of the player’s financial rights. The DRC considered that the possibility granted to the club to prematurely terminate the contract based on an injury or sporting performance of its counterparty, appeared to be of a highly subjective nature, entailing that, de facto, it was left to the complete and utter discretion of the club whether or not it was willing to continue the contractual relationship.

Moreover, in its case of the DRC of 7 February 2014, the DRC highlighted that although incapacity in itself cannot be considered as a valid reason to unilaterally terminate an employment contract, such specific circumstance will however have an effect on the amount of compensation, in the light of the bilateral character of an employment contract and the circumstance that in the event of permanent incapacity to play, a player is no longer in the position to render his services to the club [DRC Decision dated 7^th February 2014, no. 02141221].

Therefore, according to its well-established jurisprudence, and as a general rule, a player’s injury does not constitute a just cause in the sense of Article 14 of the RSTP for a club to unilaterally terminate a contract. 

*For any query, feedback, or discussion, Aakash and Ria can be contacted at [editor@sportslawandpolicyreviewreporter.com]

*NOTE- The opinions and views expressed in this article are that of the Author(s) and not of SLPRR- the expressed opinions do not, in any way whatsoever, reflect the views of any third party, including any institution/organization that the Author(s) is/are currently associated to or was/were associated to in the past. Furthermore, the expressions are solely for informational and educational purposes, and must not be deemed to constitute any kind of advice. The hyperlinks in this blog might take you to webpages operated by third parties- SLPRR does not guarantee or endorse the accuracy or reliability of any information, data, opinions, advice, statements, etc. on these webpages.

PREFERRED CITATION: Aakash Batra & Ria Mishra, Unilateral Termination of Employment Contracts on the Basis of Injury in Football, SLPRR <https://sportslawandpolicyreviewreporter.com/?p=1815> March 15, 2022.