Termination without just cause

When is an agreement terminated legal or illegally by a Football Club or a Football Player in accordance to the football law?

According to the article 13 of FIFA Regulations on the Status and Transfer of Player (RSTP) “a contract between professional and a club may only be terminated upon expiry of the term of the contract or by mutual agreement”. However, according to the article 14 of the abovementioned Regulations “a contract of employment may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause”.

The question to be answered is what is the definition of “with just cause”? However, the FIFA Regulations do not define when there is “just cause” to terminate a contract. In its established legal practice, CAS has therefore referred to Swiss law in order to determine the purport of the term “just cause”. Pursuant to this, an employment contract which has been concluded for a fixed term, can only be terminated prior to expiry of the term of the contract if there are “valid reasons” or if the parties reach mutual agreement on the end of the contract (see also ATF 110 I 167; WYLER R., Droit du travail, Berne 2002, p. 323 and STAEHELIN/ VISCHER, Kommentar zum Schweizerischen Zivilgesetzbuch, Obligationenrecht, Teilband V 2c, Der Arbeitsvertag, Art. 319-362 OR, Zurich 1996, marg. No. 17 ad Art. 334, p. 479). In this regard Art. 337 para. 2 of the Code of Obligations (CO) states – according to the translation into English by the Swiss – American Chamber of Commerce: “A valid reason is considered to be, in particular, any circumstances under which, if existing the terminating party can in good faith not be expected to continue the employment relationship”. According to Swiss case law, whether there is “good cause” for termination of a contract depends on the overall circumstances of the case (ATF 108 II 444, 446; ATF 2 February 2001, 4C.240/2000 no. 3 b aa). Particular importance is thereby attached to the nature of a valid reason has to be admitted when the essential conditions, whether of an objective or personal nature, under which the contract was concluded are no longer present ( ATF 101 Ia 545). In other words, it may be deemed to be a case for applying the clausal rebus sic stantibus (ATF 5 May 2003, 4C.67/2003 no.2). According to Swiss law, only a breach which is of a certain severity justifies termination of a contract without prior warning (ATF 127 III 467; ATF 117 II 560; ATF 116 II 145 and ATF 108 II 444, 446). In principle, the breach is considered to be of a certain severity when there are objective criteria which do not reasonably permit an expectation that the employment relationship between the parties be continued, such as a serious breach of confidence (ATF 2 February 2001. 4C.240/2000 no. 3 b aa; ATF 5 May 2003, 4C.67/2003 no. 2; WYLER R. op. cit., p. 364 and TERCIER P., Les contracts spéciaux, Zurich et al. 2003, no. 3402 p. 496). Pursuant to the established case law of the Swiss Federal Supreme Court, early termination for valid reasons must, however, be restrictively admitted (ATF 2 February 2001, 4C.240/2000 no. 3 b aa; ATF 127 III 351; WYLER R., op cit., p. 364 and TERCIER P., op. cit., no. 3394, p. 495).

Applying the aforesaid principles, the Court of Arbitration for Sports (CAS) has also defined the ‘just cause’ mentioned into the art. 14 of the FIFA RSTP stating that ‘the FIFA Regulations do not define when there is such “just cause.” One must therefore fall back on Swiss law. Pursuant to this, an employment contract which has been concluded for a fixed term can only be terminated prior to expiry of term of the contract if there is goof cause. In this regard Art. 337(2) of the Code of Obligations (“CO”)states- in loose translation: ‘Particularly any circumstance, the presence of which means that the party terminated cannot be good faith be expected to continue the employment relationship, is deemed to be good cause. (CAS 2006/A/1062)

The non- payment or late payment of remuneration by a Club does in principle – and particularly if repeated– constitute “just cause” for termination of the contracts; for the employer’s payment obligation is his main obligation towards the employee. If, therefore, he fails to meet this obligation, the employee can, as a rule, no longer be expected to continue to be bound by the contract in future. Whether, the employee falls into financial difficult by reasons of the late or non- payment, is irrelevant. The only relevant criterion is whether the breach of obligation is such that causes the confidence, which the one party has in future performance in accordance with the contract, to be lost. This is the case when there is a substantial breach of a main obligation such as the employer’s obligation to pay the employee. However, the latter applies only subject to two conditions. Firstly, the amount paid late by the employer may not be “insubstantial” or completely secondary. Secondly, a prerequisite for terminating the contract because of late payment is that the employee must have given a warning. In other words, the employee must have drawn the employer’s attention to the fact that his conduct is not in accordance with the contract ( see also CAS 2005/A/ 893; CAS 2006 /A/ 1100, marg no. 8.2.5 et seq.).

Other reasons for termination of an employment agreement with just cause could be the de-registering of the Player by the Club, the Club lose its interest in the Player’s services, misconduct behavior on behalf of the Player after a reasonable investigation by the Club, etc.

Therefore, an employment agreement can be terminated with just cause for reason/s that the party terminated cannot be good faith be expected to continue the employment relationship with the other Party. In such cases the terminated Party is not entitled to claim any compensation by the other Party.

For more information, please speak with Christoforos Florou or your usual contact at SeptemLaw in Sports.