Just cause – is three months fair?

Over the course of the past few years, there have been a considerable number of cases brought before the FIFA Dispute Resolution Chamber concerning Article 14 of the Regulations on the Status and Transfer of Players (RSTP) and the ability of a player (or, for that matter, a club) to terminate a playing contract with just cause (not, for the purposes of this article, termination with sporting just cause).

FIFA has always been keen to protect the stability of contracts and prevent situations where contracts are unilaterally terminated unless there is, in its view, sufficient reason to do so.

The issue of what does or does not constitute just cause for termination is a matter of fact for each case and will be dependent upon the various issues which make up the factual matrix. Equally, the issue of what damages should be awarded has also been covered in a number of high profile cases (although this issue still lacks any certainty, particularly over what damages should be awarded to a club).

The commentary on the RTSP provides somewhat limited guidance on what may constitute just cause. It states:

‘The definition of just cause and whether just cause exists shall be established in accordance with the merits of each case. In fact, behaviour that is in violation of the terms of an employment contract still cannot justify the termination of a contract for just cause. However, should the violation persist for a long time or should many violations be cumulated over a certain period of time, then it is most probably that a breach of contract has reached such a level that the party suffering the breach is entitled to terminate the contract unilaterally.’ (Article 14, paragraph 1)

FIFA then seeks to provide clarity in respect of this somewhat ambiguous position by way of examples.

One example FIFA provides is that of a player who has not been paid his salary. Of course, it is entirely possible that the playing contract anticipates termination in the event of non-payment and makes provision for how that is done (and in some cases what damages should be paid). However, that is not always the case, particularly outside of Europe’s big leagues and in those situations, players playing abroad would be forced to rely upon FIFA statues.

The commentary provides an example of a player who has not been paid for ‘over three months’; this player is entitled to terminate his contract if he has first put the club on notice (14 days) that he will terminate if outstanding liabilities are not settled (Article 14, paragraph 3). However, it is important to note that the footnote to this example (footnote 62 of commentary) states that ‘under normal circumstances, only a few weeks’ delay in paying a salary would not justify the termination of the employment contract’.

If there is no relevant clause within a playing contract, and a player has not been paid, what is, therefore, an acceptable time period? A player should be protected if s/he waits for a period of three months without payment, but the guidance clearly also appears to anticipate shorter periods may be acceptable as well.

If a player is looking to terminate his or her contract because the non-payment of salary is causing financial hardship but is not yet at the three-month period, it is difficult to see how to make a decision whether to terminate or not. While the commentary appears to contemplate such a situation, the rules are far from clear and the example provided by FIFA specifically mentions a time period of three months. Of course, if the matter escalated to the point of legal proceedings (either brought by the player or the club), lawyers for the player will provide examples of players who have been judged to have terminated their contracts with just cause prior to the end of a three-month period, but in reality this will always be a matter of argument and any club will strongly argue against that point. If the player decides to terminate before the three-month period has expired he/she does so in the knowledge that regardless of the financial hardship the position is causing him/her, he/she cannot be sure that ultimately it is not him/her who is sanctioned by FIFA.

The power, therefore, remains firmly in the hands of the club. If a player threatens to terminate a contract before the expiry of three months without paying wages, the club will no doubt refer to FIFA guidance and inform the player that should termination be effected, it will submit that the termination is without just cause and seek compensation under Article 17(1) of RSTP and potentially sporting sanction (a playing ban of between four and six months) as provided for under RSTP (Article 17(3) and Article 17 paragraph 2(2) of the commentary). The result is the uncomfortable situation in which it is the club, clearly in breach of its contractual obligations, who would receive compensation from the player.

The player, therefore, has to make the decision whether to terminate his or her contract to find some form of income in the knowledge that he/she could face a large fine and a playing ban (which would make the financial situation worse) or to wait in the hope that the club pays the arrears within the three-month time limit or he/she can leave. It is difficult to envisage a scenario where the player will be able to take that risk and, therefore, inevitably he/she is likely to wait until three months have passed without payment.

FIFA’s approach is based upon stability of contract and to prevent players walking away from contracts if they have not been paid immediately, thereby upsetting the transfer system.

The problem with FIFA’s approach is that this assumes a footballer can afford to remain unpaid for three months. Despite the impression which may be provided by the media, the average footballer does not earn particularly large wages and will live from month to month, relying upon regular payment to meet living expenses. Without such payment, how are players supposed to pay mortgages and support families?

A young footballer who goes three months without payment may well be struggling to survive but is prevented from pursuing other football opportunities (provided transfer windows would allow him/her to do so – which in itself is potentially unfair) which would provide an income. It is difficult to imagine an area other than sport which requires a worker to continue working for three months without pay, in clear breach of the employer’s contractual duties, before being able to walk away and find employment elsewhere.

FIFA has sought to redress this balance by introducing Article 12bis of RTSP which allows a player to complain to FIFA/national FA to request payment. This allows a player to request the action of FIFA where a club has delayed a due payment for more than 30 days, the player having put the club in default in writing with a deadline of at least 10 days to comply with its obligation under Article 12bis(3) of RSTP (this does not affect a player’s right to terminate under Article 17 if payment has been outstanding for three months - Article 12bis(9) of RSTP).

While the intention is clearly to allow the player to enforce payment by the club, it presents difficulties. Firstly, it is hardly a quick fix. A player who was expecting a salary payment at the end of March cannot complain until the end of April, and even then needs to give 10 days’ notice before referring the matter. The club has, therefore, a buffer of around six weeks to pay after the date on which it was contractually obliged to do so before it could face any sanction. It is possible that a club could be continually four to six weeks late in paying a player. The player could pursue a termination with just cause for multiple breaches but again such is fraught with difficulty and uncertainty.

Moreover, the player is aware that s/he is complaining about the club to FIFA, which is unlikely to endear him/her to the club’s management. The player will, of course, remain contracted with the same club after the complaint. Indeed, it may well make the on-going working environment uncomfortable and damage prospects at the current club which may in turn damage prospects generally (if it results, for example, in reduced playing time).

Further, FIFA’s own timescales for resolving a dispute are too long. After the investigation phase has concluded (which can itself take a few months), a single judge of the DRC should adjudicate within 30 days and the Player’s Status Committee or the DRC should adjudicate within 60 days (this is ‘as a rule’ rather than any hard and fast timescales). Again, this only prolongs the length of time a player has to go without wages. FIFA need to create a faster and more efficient system so that issues over non-payment can be dealt with quickly.

The solution is not straightforward but certainly the timescales need to be shorter. There is no reason why the time period for being able to put a club in default under Article 12bis should not be 14 days or less and for termination with just cause (Article 14) it is difficult to see why a player should not be entitled to put a club on notice once a club defaults on a second salary payment when it falls due (whatever the timescale). Further, it is debatable whether a player should need to put the club in default on notice at all – the club knows its obligations – but certainly a player should not be required to give the club the length of time currently required to rectify the issue. For example, there is no reason to provide a club with at least 10 days’ notice under Article 12bis(3) of RTSP - three days would be ample.. In addition, perhaps FIFA should consider an additional payment in circumstances where a club defaults on its contractual obligations. For example, a player may be entitled to a small uplift (perhaps 10%) for any outstanding salary when payment results from intervention by FIFA/national FA. This would surely discourage clubs from pushing the boundaries of when players are paid.

In reality, there is no easy answer, particularly when football clubs across the world have, for a long time, struggled financially. FIFA does not want to structure regulations in a way that allows players to walk away from clubs unless absolutely necessary for fear of the harm this may do to the game and the transfer system as a whole.

However, the balance at this stage is unfairly weighted in favour of the clubs. It is unacceptable that a club can default on its obligations for at least one month before facing any sanction and entirely unfair to a player that they must wait three months without payment (possibly suffering significant financial hardship in the interim) before they can terminate their contract and move elsewhere in the hope of obtaining regular payment.

Things need to change and FIFA needs to start protecting the player as well as the club.