In the wake of the news that the football season will be suspended until at least 30 April 2020, it has been rumoured that many clubs in England are in discussions with their players over a possible reduction, deferral and / or ‘cap’ to their salaries, as a result of the economic impact of COVID-19.
Many clubs will no doubt be finding it difficult to manage cash-flows in the absence of a regular stream of gate receipts, meaning that drastic financial measures may need to be implemented in order to help manage wage expenditure over the coming months, in light of the coronavirus pandemic.
Championship side Birmingham City has allegedly asked its players to take wage deferrals, with those players earning more than £6,000 per week being asked to accept a 50% wage reduction for the next four months. It is rumoured that those players affected will be paid back in stages once the football season resumes.
Although the financial position and circumstances of each club in the footballing pyramid varies extensively, in this article, we anticipate the questions that we think many football clubs in England will be asking over the coming days and weeks, in these unparalleled circumstances.
Can English clubs temporarily suspend footballer employees on zero pay?
Unless there is an express and unambiguous contractual right to suspend in these circumstances, then there is no clear route to employee suspension. Imposing a suspension without agreement from the player may give rise to employment claims and disciplinary sanctions against the club, so it is imperative that agreement is sought from the outset.
Interestingly, professional football contracts in Scotland (as ratified by the Scottish FA) include the following clause:
“In the event of the Scottish FA deciding that the game shall be suspended, either entirely or in any district or district as provided for in the articles of association of the Scottish FA, this Agreement shall be correspondingly suspended, unless the Club is exempted from such suspension or the Club otherwise determines”
A clause of this nature very much leaves the player in a vulnerable position, particularly given the fact that the current Scottish football season is to be suspended until 30 April 2020, at the earliest. Ultimately, the above clause simply means that the player contract (a document which outlines the employment relationship between the club and the player) will be suspended, in the event that the Scottish FA decides that football should be suspended (unless the relevant club decides otherwise).
Given that Scottish football is currently suspended until at least 30 April 2020, due to the coronavirus outbreak, literal reading of the above clause would suggest that it has now come “into effect” and that the playing contracts of those players who are affiliated to the Scottish FA are currently suspended (subsequently meaning that the player’s right to receive wages is suspended also).
The position in England, however, is considerably different to that in Scotland. The standard Premier League and EFL Player Contract does not include an express contractual right that would allow for a club to temporarily suspend a player’s contract in these current circumstances. However, that does not mean to say that an agreement can’t be reached between a club and a player to the contrary.
The important point to note here is that any agreement reached, along the lines of the above, must be mutually agreed and documented in writing in order to protect a club’s position against any potential employment claims and disciplinary sanctions.
Can English clubs temporarily suspend footballer employees on reduced pay?
The key point to remember here is that employee consent is necessary for a salary reduction to take place and, ultimately, for it to be effective. The reason for this is that reducing pay is seen as a variation of an employee’s contract of employment. An employment contract cannot be unilaterally varied by one party without the consent of the other and, therefore, if a club attempted to reduce a player’s salary without their consent, then this could entitle the player to bring a number of employment claims against the club and will likely lead to the club facing disciplinary sanction.
Therefore, if a club is contemplating reducing the pay of its players, it would be best advised to attempt to seek agreement with those individuals first, so that such a change can be implemented by consent. Clubs who find themselves in this difficult situation should approach their players openly and be transparent with them about the reason for the temporary suspension, as well as the reduction in their wages. Clubs may find that many players are receptive to proposals regarding a reduction in their salaries, given the benefit that it will have on the wider game in these unprecedented times.
Can the player contract be amended / varied to allow for a wage reduction?
As outlined in our article last week the standard Premier League and EFL Player Contract does not include an express amendment or variation clause that you might ordinarily expect to find in other employment or commercial contracts.
Nevertheless, domestic regulations provide that clubs shall be at liberty at any time to reach an agreement with a player to amend the terms of his contract. We also outlined last week that if such an agreement increases the player’s remuneration then (unless the agreement to vary the player contract is made out of season) it shall be a term thereof that the player’s current contract is extended by a minimum of one year.
Emphasis here is placed on the word “increases” and, as we are inevitably going to see a situation where clubs are taking steps to reduce their overall expenditure on player wages (by asking individual players to agree to a reduction in their remuneration), the aforesaid regulatory provision is unlikely to come into effect.
Clubs are also reminded of the important fact that no variation of a player contract will be valid unless that variation is in writing and signed by or on behalf of each of the parties (and that a copy of the amended contract is lodged with and accepted by the relevant league).
What about the Government’s Job Retention Scheme, does that apply to football clubs?
On Friday 20 March 2020, the UK Government announced a new scheme, known as the Coronavirus Job Retention Scheme (Scheme), to provide financial support to employers willing to put their workers on “furlough”, rather than terminate their employment.
The Scheme represents an unprecedented intervention responding to the fact that for many employers, including football clubs, business has simply stopped in the past couple of weeks. The Scheme, which is available to all businesses, will enable employers to continue their employees’ employment, and for the employees to continue to receive at least 80% of their salary (up to a limit of £2,500 a month), during circumstances in which the employee would normally be laid off or made redundant.
The financial limits of the Scheme will mean that it has little impact on the wages of players at the top end of the game. However, clubs lower down the footballing pyramid may well be eligible to access crucial financial support which will allow them to continue their employees’ employment rather than face the potential alternatives, such as redundancy.
To benefit from the Scheme the employer needs to designate “furloughed workers” who are put on leave with no requirement that they work. The intention appears to be that there is no work for the “furloughed workers” who would otherwise be made redundant. (The expression “furloughed workers” is completely new to UK law and appears to be borrowed from US labour law).
There is still a lot of missing detail on how the Scheme will actually operate in practice, as the Government has not yet passed legislation on it (this is anticipated in April). As a result it is currently unclear whether a furloughed employee will be able to do any work at all. Notwithstanding the above, it’s likely that a furloughed employee won’t be able to do any work otherwise it would undermine the purpose of the Scheme. Clubs should bear this point in mind as, if they do want to furlough their players, they are unlikely to be able to expect them to continue to undertake their duties whilst on furlough (e.g. individual training schedule, online club marketing and fan engagement activities including any remote social media appearances).
It is also important to remember that an employer will have to notify employees of this change in status to “furloughed workers”. The change in status remains subject to existing employment law and, as such, it would be best to avoid the prospect of claims by getting an employee’s agreement/consent to the change in status.
The Brabners Employment Team has put together a separate detailed blog on the Coronavirus Job Retention Scheme which can be accessed here.
- Approach players openly and be transparent with them about any temporary deferral and / or reduction in wages. Remember employee consent is necessary for a salary reduction to take place.
- Any agreement reached to reduce a player’s salary must be mutually agreed and documented in writing.
- Ensure that any variation to a player’s contract is documented in writing and signed by or on behalf of each of the parties. A copy of the amended contract must then be lodged with and accepted by the relevant league.
- Review your staffing levels and consider who might be placed on furlough leave.
- Keep in regular contact with your players and other employees, providing update where possible.